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Motilla Oswal Report
The Q3 FY26 earnings have been in line with Motilal Oswal's expectations, with a beat-miss ratio for its universe remaining balanced – 34% of the companies exceeded brokerage's estimates, while 32% reported a miss at the PAT level. Importantly, the Q3 FY26 earnings season reaffirms its analysis that the aggregate earnings revision trajectory has become more palatable.
Clearly, with the heavy lifting by the RBI and Government of India through a series of stimulative monetary and fiscal measures, the macro environment for earnings has improved and is somewhat reflected in an impressive Q3 FY26 brokerage's universe PAT growth of 16% YoY – mildly ahead of its estimates of 14%.
In this backdrop of stabilising earnings, Motilal Oswal believes that Indian markets appear poised for a better performance in CY26, especially after the sharp underperformance in CY25. A key overhang in the current environment has emerged in the form of ongoing disruptions in the IT services sector and their potential impact on other sectors, and remains a key near-term monitorable.
The brokerage expects ~12% earnings growth for Nifty over FY25-27E. Valuations for Nifty at ~20.2x are near the LPA at 20.9x 12m forward earnings (at a 3% discount), while they remain stretched for broader markets.
The brokerage keeps overweight on auto, PSU Banks, diversified financials, technology, consumer discretionary, and capital goods + EMS, which are its key preferred investment themes.
The brokerage remains Neutral on telecom, cement, and healthcare, while maintaining underweight stance on private banks, consumer staples, oil and gas, utilities, and metals within its model portfolio.
Top Nifty-50 Ideas: Bharti Airtel, SBI, ICICI Bank, L&T, Infosys, M&M, Titan, Bharat Electronics, Eternal, Tata Steel, and Interglobe Aviation.
Top Non-Nifty-50 Ideas: TVS Motors, Groww, Indian Hotels, AU Small Finance, Dixon Tech, Suzlon Energy, Coforge, Radico Khaitan, Delhivery, and V-Mart Retail.
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