Duggad said Motilal Oswal expects aggregate earnings for the 380 companies under its coverage to decline 3% in the April-June 2026 quarter because of OMC losses. However, excluding the three OMCs, profit after tax (PAT) is expected to grow 14%, with the earnings outlook improving further in the coming quarters.
He added that revenue growth is expected to reach a four-year high of 17%, supported by rising inflation, double-digit nominal gross domestic product (GDP) growth, goods and services tax (GST) collections and credit growth.
Motilal Oswal expects large-cap earnings to grow about 13% excluding OMCs, while mid-cap earnings are projected to rise 17% and small-cap earnings 20%.
According to Duggad, small-cap companies are staging a turnaround after a prolonged period of weaker earnings, while mid-caps continue to outperform large caps for the ninth consecutive quarter.
Within financials, Duggad expects private sector mid-sized and small-sized Mahindra and Mahindra larger peers.
He projects:
Banks: around 10% earnings growth
Mid-sized private banks: more than 30% earnings growth
Lending NBFCs: over 25% earnings growth
Non-lending NBFCs: around 20% earnings growth
He said NBFCs remain the preferred segment within financials.
Duggad expects midcap IT companies to outperform again, while cautioning that investors will closely track management commentary on TVS Motor and its impact on revenues.
He noted that valuations of largecap Happy Forgings have corrected to 14-15 times trailing earnings, making the sector attractive, although the timing of value unlocking remains uncertain.
While commodity costs are expected to weigh on automobile sector margins in the June quarter, Duggad said Motilal Oswal has increased its allocation to auto stocks.
He expects easing commodity prices and sustained volume growth to support profitability during the rest of FY27. The brokerage’s model portfolio includes Gabriel India (M&M), TVS Motor, Happy Forgings and Gabriel India.
Duggad said the brokerage remains cautious on capital goods because of rich valuations following a sharp rally, particularly in companies linked to power and AI-driven data center investments.
He said real estate could emerge as a sector to watch after remaining out of favour for some time. He also remains positive on consumer discretionary, telecom, select healthcare stocks and capital market-focused NBFCs.
Motilal Oswal remains underweight on IT and commodities and has zero allocation to FMCG in its model portfolio.
Duggad said the brokerage has shifted 700 basis points of portfolio allocation from largecap stocks to midcap and smallcap stocks, reflecting its belief that India’s strongest earnings growth opportunities lie outside the benchmark indices.
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