INSUBCONTINENT EXCLUSIVE:
With the Nifty expected to report a modest 5% year-on-year (YoY) growth when the March quarter results season begins June 10 with TCS
leading the charge, domestic brokerage firm Motilal Oswal declared on Monday that Q1 will likely mark the critical inflexion point from
months of subdued single-digit growth."We perceive 1QFY26 as the 'Crossover quarter,' which should mark the crossing-over from a subdued
low-single-digit earnings growth of FY25 towards a more sustainable double-digit earnings growth over the four subsequent quarters," Motilal
Oswal said in its latest research note.The brokerage's bottom-up analyst estimates project a sharp acceleration ahead, with MOFSL universe
earnings expected to surge 10% YoY in Q1, followed by an impressive 12%/15%/14% growth trajectory in the subsequent three quarters
The Nifty is forecast to post 5% growth in Q1, then accelerate to 6%/13%/16% in the following quarters.The quarter's standout feature will
be the remarkable breadth of earnings growth across sectors, a stark contrast to the narrow, uneven recovery of recent quarters
Multiple sectors are expected to deliver double-digit profit growth, with real estate leading the charge at 40%, followed by EMS at 46%,
cement at 35%, and retail at 23%."The number of sectors likely to post negative growth is expected to be lower at 2 (Autos and Metals) in
Significantly, for the full year FY26, Motilal Oswal currently doesn't factor any sector to post negative profit growth.
Live EventsThe oil
& gas sector is expected to be the primary driver, with a massive 42% year-on-year growth fueled by oil marketing companies
Telecom is set for a dramatic turnaround from losses to profit, while other key contributors include technology (+7%), lending NBFCs (+8%),
HeadwindsHowever, the financial sector presents a more cautious picture
The MOFSL Financial Universe is expected to post a muted 3% year-on-year earnings growth, primarily due to weak performance by private
banks, which are projected to report their second quarter of earnings decline (3% year-on-year) in March 2020.PSU Banks are likely to clock
moderate earnings growth of just 5%, their lowest in 20 quarters
The insurance universe earnings are expected to moderate to 4% YoY, while NBFC non-lending is set to record its lowest earnings growth in 10
quarters at 11%.Technology Sector's Continued StruggleThe technology sector faces another challenging quarter, likely to deliver modest
earnings growth of 7% year-on-year, the lowest in five quarters and marking the eighth consecutive quarter of single-digit growth.Also read:
Trent shares down 35% from peak: Should you buy the dip in this Tata stock?Sales and EBITDA of the MOFSL Universe are projected to grow 4%
and 10% year-on-year respectively, while the Nifty is expected to see sales and EBITDA improve 7% and 6% year-on-year.Motilal Oswal
maintains an overweight stance on BFSI, industrials, and healthcare, while remaining underweight on oil & gas, cement, and metals
The brokerage has upgraded automobiles from underweight to neutral, signalling cautious optimism about the sector's prospects.
