Q2 Results Preview: OMCs To Drive The Modest Earnings Growth; L&T, M&M, Swiggy Among Motilal Oswal's Top Ideas

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Motilal Oswal Report

We expect earnings of our universe and Nifty to grow 9% YoY and 6% YoY, respectively, in Q2 FY26. Excluding financials, the earnings are expected to jump 16% YoY and 10% YoY, whereas, excluding global commodities (i.e., Metals and oil and gas), our universe and Nifty are likely to report 6% and 4% YoY growth in earnings, respectively, for the quarter.

The overall earnings growth is expected to be modest and will be anchored by O&G (+25% YoY), NBFC-Lending (+21%), Telecom (loss-to-profit), Metals (+10%), Technology (+6%), Cement (+62%), Capital Goods (+14%), and Healthcare (+10%).

These sectors are likely to contribute 95% of the incremental YoY accretion in earnings. Conversely, both Private Banks (-7%) and PSBs (-7%) are likely to contribute adversely to earnings.

Sales and Ebitda for our Universe are likely to grow 6% and 8% YoY, while the same for the Nifty are likely to improve 7% YoY and 8% YoY, respectively. Ex-Commodities, Ebitda for our Universe and Nifty is projected to grow 5% YoY and 6% YoY, respectively.

In Q2 FY26, our universe large-cap/mid-cap/small-cap universe is likely to register a PAT growth of 7%/23%/14%, YoY. Moreover, sales for large-/mid-/small-caps are likely to grow 6%/6%/8% YoY, and their Ebitda would clock 8%/13%/3% YoY growth for the quarter.

The earnings of our financial Universe are expected to dip 1% YoY primarily due to the weak performance of both Private and Public banks, offset by the strong performance of NBFC-Lending.

The Private Banks sector is projected to report an earnings decline (of 7% YoY) for the second straight quarter since Mar’20. The PSU Banks Universe is also likely to report an earnings decline of 7%, the lowest in 22 quarters.

The earnings of the Insurance sector are expected to remain modest at +6% YoY. NBFC-Lending is likely to post a strong 21% YoY earnings growth (the highest in six quarters), while NBFC Non-lending is set to post a flat YoY growth in earnings – the lowest in 13 quarters.

The earnings of the O&G Universe are likely to jump 25% YoY, led by OMCs. This marks the second quarter of growth after five consecutive quarters of decline.

The Telecom universe is likely to clock profits (for the fourth successive quarter) of Rs 23 billion in Q2 FY26 (vs a loss of Rs 15 billion in Q2 FY25 and a profit of Rs 16 billion in Q4 FY25), mainly fueled by continued improvement in margins of Bharti Airtel.

The Metals universe is projected to report a modest profit growth of 10% YoY.

The Cement universe is expected to report a strong earnings growth of 62% YoY in Q2 FY26 (over the weak base of 48% earnings decline for Q2 FY25). The sector is likely to clock the second quarter of earnings growth after four consecutive quarters of significant earnings dip.

The Capital Goods sector is projected to report a healthy earnings growth of 14% YoY. However, the sector would report the second quarter of less than 15%+ earnings growth after Q4 FY25.

The Healthcare universe is likely to report 10% YoY earnings growth (the lowest growth in eight quarters), after clocking six quarters of 15%+ earnings growth until Q4 FY25.

The Real Estate universe is likely to deliver a strong quarter with earnings growth of 29% YoY in Q2 FY26 over a strong base of Q2 FY25. The Technology sector is likely to register a modest earnings growth of 6% YoY, the lowest growth in six quarters. This will also mark the ninth quarter of singledigit profit growth.

The auto sector is likely to report a modest quarter of YoY earnings growth of 5% in Q2 FY26 over a flat base of Q2 FY25.

The Consumer sector is expected to post a muted earnings growth of 3% YoY, marking the sixth consecutive quarter of weak earnings print.

The Chemicals sector is also likely to report a muted 3% YoY earnings growth (despite a weak base of 5% YoY earnings dip in Q2 FY25). However, this will mark the third consecutive quarter of earnings growth following a seven-quarter decline.

We expect the Ebitda margin (ex-Financials) to expand 110bp to 17.5% for our Universe. Conversely, for the Nifty-50, Ebitda margin is likely to expand 100 bp to 21.1% (ex-Financials) during the quarter.

Top ideas:

Largecaps: Bharti Airtel, ICICI Bank, Larsen & Toubro, Mahindra & Mahindra, Ultratech Cement, Titan Company, Max Healthcare, Bharat Electronics, Tech Mahindra, TVS Motors, Macrotech, and Indian Hotels.

Midcaps and Smallcaps – Dixon Technologies, SRF, Suzlon Energy, Jindal Stainless, Coforge, Supreme Industries, Page Industries, Kaynes Tech, Radico Khaitan, VIP Industries, UTI AMC, Swiggy, and Niva Bupa Health.

Click on the attachment to read the full IPO report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.