Q1 Results Review: Earnings Cuts Moderating, Says Motilal Oswal; Sees Nifty 50 EPS Growth At 9% In FY26

Motilal Oswal Financial Services Ltd. sees the corporate earnings in the April-June quarter as ‘modest but resilient’, which was largely in line with the estimates. The Q1FY26 earnings have broadly been in line, with the severity of earnings cuts moderating compared to the previous quarters, albeit the trend of a higher number of downgrades continues into this quarter.

Nifty 50 EPS Growth Projection

The earnings per share, or EPS growth for Nifty 50 is projected to rise to around 9% in fiscal year 2026, as against an anemic 1% in FY25, as per the brokerage firm. The EPS growth will be aided by a likely improvement in the macro environment owing to the stimulative fiscal and monetary measures.

Indian Equity Market Outlook

While the Indian equity market has been volatile over the past two months owing to tariff jitters, we believe that improved earnings prospects and reasonable valuations (barring small-caps) should enable the market to achieve modest gains. We believe that the influence of the US tariff wars on Indian markets will be limited.

Sectoral Outlook

Motilal Oswal further said that it is ‘overweight’ on BFSI, Consumer Discretionary, Industrials, Healthcare & Telecom sectors, while being ‘underweight’ on Oil & Gas, Cement, Real Estate, and Metals. The aggregate earnings of the MOFSL Universe companies grew 11% year-on-year, versus the brokerage’s estimate of 9% rise.

Earnings Growth Drivers

Excluding Financials, earnings for the MOFSL Universe grew 13% against an estimate of 14%, whereas, barring global commodities (i.e., Metals and O&G), the MOFSL Universe reported a 9% growth as compared to the estimate of 6%. The overall modest earnings growth was anchored by O&G (+27% YoY), Telecom (loss-to-profit), NBFCLending (+14%), PSU Banks (+7%), Technology (+7%), Cement (+51%), and Healthcare (+11%), which contributed 77% of the incremental YoY accretion in earnings.

Beat-Miss Ratio and Ebitda Margin

The beat-miss ratio for the MOFSL Universe was balanced, with 37% of the companies exceeding the brokerage’s estimates, while 36% reported a miss at the net profit level. Further, the Ebitda margin of the MOFSL Universe, excluding Financials, expanded by 70 basis points year-on-year to 17.6%, primarily aided by the Oil & Gas, Cement, Telecom, Metals, and Logistics sectors but hurt by the Automobiles, Consumer, Utilities, and Real Estate sectors.

For more information on the Indian stock market and to stay updated on the latest news and trends, visit our website. You can also check the latest Nifty levels and Sensex news to make informed investment decisions.