As the Q2 FY27 earnings season begins, Motilal Oswal expects strong broad-based earnings growth with aggregate earnings for its universe surging 22% YoY, the highest growth in 11-quarters. According to the brokerage's latest analysis, earnings are likely to be anchored by financials, led by banks (private and PSU, NBFCs), metals, oil and gas (ex-OMC), and telecom sectors. Nifty-50 aggregate earnings are expected to grow 27% YoY, the highest in 17 quarters. The brokerage's large-/mid-/small-cap universes are likely to register PAT growth of 23%/11%/29% YoY respectively, with ex-OMCs large- and mid-cap universes showing stronger growth of 25% and 20% respectively. As reported by LiveMint, earnings excluding OMCs are expected to grow 24%, the strongest in 12 quarters. The brokerage notes that India's ongoing market consolidation, alongside continued earnings recovery from FY25 lows, has led to a sustained cooling in valuations from the highs seen in 2024, with large- and mid-caps witnessing the steepest valuation corrections of 31% and 36% respectively from their respective peaks.
Motilal Oswal Financial Services has initiated coverage on 40 stocks across healthcare, retail, education, power, defence, auto components, payments and insurance distribution, with target prices pointing to upside ranging from 3% to 165% based on October 5 market levels. According to the brokerage's October strategy report The Eagle Eye, authored by Anshul Agarwal and Deven Mistry, the recommendations come against a backdrop of continued weakness in Indian equities, renewed foreign institutional selling, higher global bond yields and elevated commodity prices. The report notes that domestic institutional buying has strengthened even as foreign selling has resurfaced, while valuations have cooled following the market correction. As per LiveMint, the brokerage expects its model portfolio to deliver 19% profit growth in FY27 and 14% in FY28, following 13% growth in FY26. With valuations well below their peaks, healthy earnings growth, and a resilient macroeconomic environment, the risk-reward profile for Indian equities has improved meaningfully, though the brokerage highlighted global interest rates, energy prices, geopolitical developments and foreign investor flows as key variables for the market.
Turtlemint Fintech Solutions leads the coverage with the highest potential upside of 165%, followed by V2 Retail, Physicswallah, Pine Labs and SPR Auto Technologies. As reported by Motilal Oswal, the brokerage expects the latest research slate to benefit from company-specific growth drivers, ranging from hospital expansion and value retail to thermal power capacity, defence manufacturing, digital payments and insurance distribution. The report points to a broad-based sell-off in Indian equities, with technology and financial stocks among the weaker segments, while noting that higher commodity prices could keep pressure on corporate margins. Within its consumer coverage universe, almost all segments are expected to see higher revenue and EBITDA growth YoY in Q2FY27, with staples estimated at 15% revenue growth and 13% EBITDA growth, paints and adhesives growing 16% in revenue and 12% in EBITDA, and jewellery showing 23% revenue and 26% EBITDA growth.
Motilal Oswal's model portfolio maintains exposure to established companies such as ICICI Bank, HDFC Bank, State Bank of India, Infosys, Larsen & Toubro, Bharat Electronics, Titan Company, Reliance Industries, Bharti Airtel and Apollo Hospitals. The portfolio also includes newer and mid-cap opportunities such as Meesho, PhysicsWallah, Jubilant FoodWorks, GE Vernova T&D, Kirloskar Oil Engines, Oberoi Realty, Pearl Global and Fujiyama Power. According to LiveMint, the brokerage has an overweight stance on diversified financials, information technology and new-age platforms, manufacturing and industrials, and discretionary consumption, while maintaining an underweight stance on private banks, energy and telecom, and commodities. The separate mid- and small-cap allocation includes Oberoi Realty, Inventurus Knowledge, Rubicon Research, Pearl Global, Fujiyama Power, PVR Inox and SPR Auto Tech, with PVR Inox carrying a neutral recommendation and the other six stocks having Buy ratings.
Aster DM Healthcare receives a 'Buy' rating with a target price of ₹910, implying about 32% upside. According to Motilal Oswal, the Aster DM Healthcare and Quality Care India merger is expected to create one of India's largest hospital platforms with 39 hospitals and around 10,600 operational beds across 28 cities. The combined platform has capacity to expand beyond 15,000 beds by FY30 through brownfield, greenfield and asset-light expansion. The brokerage expects revenue, EBITDA and profit after tax to grow at compound annual rates of 19.5%, 25% and 33% respectively between FY26 and FY28.
Adani Power is assigned a 'Buy' rating with a target price of ₹250, implying about 26% upside. According to Motilal Oswal, the company had around 18 gigawatts of capacity in Q2 FY27, with most operating capacity tied up through long-term power purchase agreements. The brokerage expects Adani Power's capacity to rise 2.3 times to 42 gigawatts by FY32, with limited competition in the thermal segment. Solar Industries India receives a 'Buy' rating with a target price of ₹23,000, implying about 19% upside, with the brokerage expecting consolidated revenue and profit after tax to compound at 43% and 34% respectively between FY26 and FY30.
Motilal Oswal expects India's auto sector to post strong Q2 FY27 revenue growth on healthy demand, but flags that elevated commodity costs could keep margins and earnings under pressure despite robust volumes. According to the brokerage's latest analysis, auto OEM companies under coverage are expected to post a strong 31% YoY revenue growth, with two-wheelers OEMs at ~26%, passenger vehicles at 30% and commercial vehicles at 39%. However, prices of key inputs have been on an uptrend since Q3 FY26, and despite price hikes, there is likely to be some under-recovery due to the sharp increase in a short span. Given the strong volume growth, auto ancillaries in the brokerage coverage are expected to post ~21% revenue growth, though the surge in commodity prices and lag mechanism for cost pass-through could result in relatively lower EBITDA/PAT growth of 8%/4% for auto ancillaries. Mass-market tyre companies are likely to witness the sharpest margin contraction in Q2. Motilal Oswal believes that the recent correction in stock prices across the sector has largely factored in the impact of commodity inflation on earnings, and underlying demand remains strong, with regular price hikes expected to gradually offset the commodity inflation and help drive earnings in the medium term.
