L&T, UltraTech, Bharti Airtel, Maruti Suzuki Seen Outperforming Amid Muted Q3 Earnings Growth
According to BofA’s Amish Shah, L&T, UltraTech, Bharti Airtel, Maruti Suzuki, and Eicher Motors are likely to be strong performers in the Nifty index. This comes as the third quarter of this fiscal is expected to extend the ongoing earnings slowdown.
The broader market is likely to grapple with weak sentiment, but BofA flags specific stocks and sectors that could still deliver strong double-digit earnings growth. The brokerage expects the Nifty to post another quarter of subdued earnings growth of around 5% year-on-year, sequentially lower than 7% in the second quarter and 11% in the first quarter.
Expected Earnings Growth
BofA expects the drag to remain concentrated, with Financials (+2% YoY), IT (+7% YoY), and Telecom (+35% YoY) together accounting for nearly 60% of overall earnings growth, highlighting the narrow base of recovery. The brokerage points to UltraTech Cement, Larsen & Toubro, Bharti Airtel, Maruti Suzuki, and Eicher Motors as standout performers, with earnings growth expected in the 29–40% YoY range.
Industrials and cement are expected to benefit from execution momentum and operating leverage, while autos continue to gain from favorable mix and pricing. Excluding Financials, BofA expects a relatively healthier picture, with Nifty earnings growth of 8% year-on-year, driven by 9% topline growth and broadly stable margins.
Sensex and Nifty Performance
The Sensex (ex-financials) is projected to deliver an even stronger 10% year-on-year earnings growth, underscoring the divergence beneath the headline index. Despite pockets of strength, BofA cautions that market sentiment is likely to struggle in the near term, largely due to challenges in Financials and IT, which together command 46% of the Nifty’s weight.
For banks, while loan growth is improving, softer deposit growth and the risk of further rate cuts remain key overhangs. In IT services, easing US rate pressures, improving banking demand, and tariff relief are positives, but unlikely to translate into upbeat near-term commentary.
Telecom and Other Sectors
Beyond these, the brokerage expects a stable quarter for Telecom and continues to factor in a headline mobile tariff hike in the second half of calendar year 2026, which should support medium-term earnings visibility. At the stock level within the Sensex index, BofA expects Eternal, Tech Mahindra, Bharti Airtel, Maruti Suzuki, and Mahindra & Mahindra to post strong growth, while SBI, Power Grid, Axis Bank, Reliance Industries, and ICICI Bank are likely to report weaker numbers.
Outlook and Expectations
Looking ahead, BofA notes that the Street has already made sharp downgrades to earnings expectations, cutting fiscal 2026 and fiscal 2027 Nifty earnings by 11% and 6% respectively during calendar year 2025. With consensus growth estimates now closer to BofA’s own assumptions, the brokerage expects earnings cuts to moderate.
Growth is likely to accelerate into financial year 2027, supported by a pickup in loan growth for Financials, discretionary spending aided by GST cuts, telecom tariff hikes, stronger non-ferrous metals, and a very low base for IT and Staples. From a positioning perspective, BofA remains overweight rate-sensitive cyclicals, including Financials, Real Estate, passenger and commercial vehicles, and regulated power utilities.
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Conclusion
In conclusion, the Indian stock market is expected to experience muted Q3 earnings growth, but certain stocks and sectors are likely to outperform. L&T, UltraTech, Bharti Airtel, Maruti Suzuki, and Eicher Motors are expected to be strong performers, while Financials and IT may struggle. As the market continues to evolve, it’s essential to stay informed and up-to-date on the latest news and trends.