Nifty Q1 earnings to grow 10%, highest in 4 quarters, says Motilal Oswal. Which sectors will take charge this quarter?

As the June quarter earnings season gets underway with TCS set to report its Q1FY27 results on Thursday, domestic brokerage Motilal Oswal expects earnings for its coverage universe to decline 3% year-on-year, marking the weakest performance since September 2020. In contrast, it forecasts Nifty earnings to grow 10%, the strongest pace in four quarters.

Motilal Oswal expects profit after tax (PAT) for its largecap and midcap coverage universe to decline 2% and 14% year-on-year, respectively, in Q1FY27. In contrast, its small-cap universe is projected to post 20% YoY PAT growth.

Revenue growth is expected to remain healthy across segments, with large-, mid- and small-cap companies likely to report sales growth of 17%, 15% and 16% YoY, respectively. EBITDA is estimated to decline 2% for large-caps and 7% for mid-caps, while small-caps are expected to register 12% growth during the quarter.


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Who will shine the brightest?

Motilal Oswal expects overall earnings growth in Q1FY27 to be supported by a broad-based performance across sectors. Financials are likely to remain the biggest contributor, led by NBFC-lending companies with 27% year-on-year profit growth, followed by private banks at 10% and PSU banks at 9%.

The brokerage also expects strong earnings growth from metals (31%), technology (14%), capital goods (10%), retail (27%), consumer durables (27%) and the consumer sector (6%). Telecom profits are projected to surge 3.3 times year-on-year, driven by Bharti Airtel and a narrowing of losses at Vodafone Idea. Building materials (36%) and electronics manufacturing services (EMS) (29%) are also expected to make meaningful contributions to overall earnings growth.

The laggards

On the other hand, Motilal Oswal expects the oil and gas sector to report a sharp 94% year-on-year decline in profits, primarily due to oil marketing companies (OMCs), which are estimated to post a combined loss of Rs 36,400 crore. The brokerage said this is likely to weigh significantly on the aggregate earnings of its coverage universe in Q1FY27.

It also expects automobiles and healthcare to report a 3% decline in earnings each, while the cement sector is likely to see profits fall 13% YoY.

Excluding financials, the brokerage expects EBITDA margin for its coverage universe to contract by 330 basis points to 14.2%, the lowest level in 15 quarters. For the Nifty-50, EBITDA margin, excluding financials, is projected to decline by 90 basis points to 20.5% during the quarter.

Motilal Oswal has marginally lowered its FY27 and FY28 Nifty earnings per share (EPS) estimates by 0.8% each. The brokerage now expects Nifty EPS to grow 15% year-on-year to Rs 1,225 in FY27 and 16% to Rs 1,422 in FY28. The downward revision was largely driven by lower earnings expectations for the telecom, logistics, healthcare, BFSI and consumer sectors.

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Motilal Oswal top picks

Among its top Nifty-50 picks, Motilal Oswal prefers Bharti Airtel, SBI, ICICI Bank, M&M, Titan, Eternal, Shriram Finance, InterGlobe Aviation, HDFC AMC and BSE.

Its preferred non-Nifty-50 ideas include TVS Motor, Radico Khaitan, Indian Hotels, RBL Bank, Dixon Technologies, Coforge, Kirloskar Oil Engines (KOEL), Arvind and Delhivery.

Indian equities have remained volatile over the past two years, with the market undergoing an extended phase of consolidation and time correction amid uncertainties surrounding the U.S. trade tariff war, shifting domestic policy dynamics, energy price shocks and supply disruptions arising from the West Asia conflict.

Despite an improving macroeconomic backdrop, the market remains fundamentally bottom-up, with growth-oriented themes and companies scaling up expected to be the key beneficiaries. As leadership becomes increasingly stockspecific, company rankings are likely to evolve meaningfully over the next 3–5 years.

Companies that successfully gain scale and strengthen their competitive positioning are expected to command larger market caps and, in turn, higher portfolio weights, it said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)