Rs

India Strategy

India Strategy | Earnings drought ending, finally!

October 2025

Reform. Resilience. Revelry!

Gautam Duggad

-

Research Analyst

(Gautam.Duggad@MotilalOswal.com)

Investors are advised to refer through important disclosures made at the last page of the Research Report.

1

Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

April 2021

Content:

Reform. Resilience. Revelry!

01

Page #3

Summary

02

Page #10

Corporate earnings at a glance:

Defensives poised to aid earnings

growth

03

Page #13

A year of range-bound market

movement

04

Page #17

2QFY26 Preview: OMCs to drive

earnings, while Private Banks to

drag the same

05

Page #30

MOFSL Universe: 2QFY26 Highlights

& Ready Reckoner

06

Page #47

Sector & Companies Preview

AUTOMOBILES

–

Pg47

CVs and 2Ws see demand

revival in Q2

CAPITAL GOODS

–

Pg65

Activity remains strong in

select pockets

CEMENT

–

Pg78

Near-term weakness

persists; the long-term

outlook positive

Chemicals

–

Pg88

Volume-led recovery

amid weak spreads and

pricing pressure

CONSUMER

–

Pg101

Trade disturbance and

early festive season to

impact growth trend; all

eyes on commentary

CON. DURABLE

–

Pg133

Strong C&W momentum,

but weak RAC demand

EMS

–

Pg139

Domestic EMS industry

continues to surge

ahead!

FIN. BANKS

–

Pg145

Headwinds persist;

earnings to recover in

2HFY26

NBFC

–

Pg164

Demand trends soft,

except in gold; asset

quality stays weak

NON LENDING

–

Pg183

Rebuilding momentum

with some regulatory

overhang

HEALTHCARE

–

Pg201

Pharma revenue growth

to be weak in 2QFY26

INFRA

–

Pg220

Weak execution due to

heavy monsoon

LOGISTICS

–

Pg224

Logistics volumes remain

muted in 2QFY26

METALS

–

Pg231

Weak steel prices to

dampen ferrous earnings

OIL & GAS

–

Pg243

Earnings to soften QoQ

amid weaker margins

Plastic Pipes

–

Pg257

Weak demand and

volatile pricing to

dampen 2Q earnings

REAL ESTATE

–

Pg253

Resilient presales

momentum despite

seasonal softness

RETAIL

–

Pg268

Steady quarter as early

festive boost offsets

weak start

TECHNOLOGY - Pg282

Indian IT: Navigating

headwinds

TELECOM - Pg296

Steady quarter; next

tariff hike key

monitorable

UTILITIES

–

Pg306

Power demand remains

muted, renewables hold

steady

Others

–

Pg310

India Strategy

BSE Sensex: 83,433

Nifty 50: 25,461

India Strategy | 2QFY26

Revelry!

Reform. Resilience.

Preview

Mastering the game!

Reform. Resilience. Revelry!

India stands at a crucial juncture in shaping its economic and geopolitical future

through self-determination. Over the past six months, the country has faced several

adverse developments, such as the US tariffs, global geopolitical headwinds, and a

kinetic war. Nevertheless, Indian policymakers have chosen to respond with a ‘resolve

to reform’, turning adversities into opportunities to lay the ground for much stronger,

long-term economic outcomes. Against this backdrop, we discuss the 2QFY26

earnings, and see it as a quarter of bottoming earnings growth and a moderation in

the trajectory of earnings cuts. More importantly, this quarter will reflect the initial

and partial impact of GST2.0 announcements for few sectors, while the corporate

commentaries accompanying earnings releases will be crucial to better assess the

structural impact of reforms on overall demand and corporate earnings. Our bottom-

up estimates suggest a 9% YoY growth in 2QFY26 aggregate PAT for the MOFSL

universe. However, beyond 2QFY26 earnings, given the evolving macro and global

backdrop, we believe markets will start focusing to 2026 soon and keenly analyze

evidence of the positive effects of various policy measures.

Large caps outperform in CY25YTD

and since Sep’24 highs

Nifty-50

Nifty Midcap-100

Nifty Smallcap-100

13

4

-1

-6

YTD

change

-6 -7

-10

Change

from

Sep'24

high

3-yr

CAGR

(%)

India

–

resilient amid headwinds!

Over the past few months, India has witnessed an unprecedented confluence of

multiple headwinds, such as 1) geopolitical strife, with India forced to engage in kinetic

war, 2) a constant flow of disproportionate, punitive, and unfair US tariff measures, and

3) massive FII outflows

– USD9b between Jul and Sep’25. However, the Indian

government’s response to these chiefly

external developments has been swift,

decisive, and oriented towards long-term capacity building. GST2.0 is one of the

biggest reforms in the past decade, and the government is likely to follow this up with

further reform measures to improve the business environment and potential

economic growth rate. There will likely be a cavalry of reforms after GST 2.0, including

the long-overdue factor market reforms, especially in land and labor, along with

judicial reforms, faster approvals and permits, etc. In addition to policy changes, the

focus will also be on improving the ease of doing business and ease of living,

decriminalizing trivial offenses, and ironing out avoidable costs and day-to-day hassles

that reduce business efficiency.

23 23

Both monetary and fiscal policies working in tandem

The government has been proactive in addressing economic concerns, and the recent

GST rate rationalization response is in addition to several other measures announced

earlier. Particularly on the monetary side, the RBI has been cognizant of weakening

growth impulse, and emboldened by low inflation (the latest CPI print at 2.1%), the RBI

has opened monetary taps by cutting the repo rate by 100bp to 5.5%, while the CRR

rate will be cut by 150bp (by Nov’25). Moreover, the liquidity situation, which was

earlier in the deficit zone, has moved to the surplus territory

–

facilitating better

transmission

–

following several back-to - back OMOs and FX swaps. Although the

Central Bank did not announce any further repo rate cuts at the last policy meet, the

overall commentary was benign and growth-positive, with multiple measures aimed at

easing credit flow within the system. This, coupled with the personal income tax

forbearance of INR1t and the latest GST cuts, should work through the system and

3

Abhishek Saraf

Abhishek.Saraf@MotilalOswal.com

Deven Mistry

Deven@MotilalOswal.com

Anshul Agarawal

Aanshul.Agarawal@MotilalOswal.com

October 2025

Reform. Resilience. Revelry!

Mastering the game!

MOFSL Universe to clock ~10%

earnings growth in 2QFY26E

PAT growth YoY (%)

9.9

6.5

10.6

catalyze demand revival, growth acceleration, and improved potential for corporate

earnings. However, growth can be affected if the tariff stalemate extends into 2HFY26,

especially if the US issues further trade-related announcements targeting other sectors

or aspects of its trade with India.

9.1

Resolution to tariff stalemate key for near-term performance

Indian equities have underperformed global peers in the past six months, owing in

good measure to the US tariff measures. Complex global geopolitical equations have

resulted in what we deem as an unjustified and harsh singling out of India by the US for

punitive economic measures. However, we believe the Indian economy is robust

enough to absorb such external shocks (the last two quarterly GDP growth prints of

7.4% and 7.8% in 4QFY25/1QFY26 bear testimony) and that economic forces will

eventually prevail over populist compulsive policies. Nonetheless, in the near term,

Indian markets will stay hostage to volatile sentiments towards Indian equities,

particularly from foreign investors. Hence, any resolution or signs of thaw/easing in

Indo-US engagement will be a key sentiment booster. This, coupled with strong

domestic macros and an improving earnings growth trajectory, should lend support to

Indian equities.

DII flows remain supportive; a pause in FII outflows can be a key catalyst

India’s domestic retail investors have

continued to maintain their faith in Indian equities

and have been consistently investing through SIPs into Mutual Funds (INR840b in

2QFY26). Consequently, DIIs have remained strong buyers of Indian equities (investing a

net USD25b in 2QFY26

–

~25% higher than the USD20b net flows posted in 1QFY26).

This has also broadly offset the supply of fresh issuances, thereby ensuring limited

impact from a surge in primary market activities. In contrast to domestic institutions, the

foreign institutional flows, after witnessing some traction in 1QFY26, again turned

negative in 2QFY26, posting a net outflow of USD9.3b vs. a net inflow of USD5.4b in

1QFY26. We continue to believe that domestic investors will remain steadfast in their

confidence in Indian equities, providing robust support during drawdowns. Hence,

Indian equities can recover even at the slightest indication of a pause in FII outflows.

Given India’s sharp underperformance over the past one year, combined with the

tailwinds of improving earnings and a policy overdrive, we expect a rotation of FII

capital back into India. This should offer a reasonable upside potential for Indian

equities from current levels.

Key investment themes to align the investment portfolio

Against the current backdrop, we view the following key investment themes emerging:

1) Divergence between Financials and IT services:

We are witnessing divergence in the

prospects of two of the largest sectors, Financials and IT services. Within Financials,

while non-lending names have done well in the past few years, banks were beset by

slowing growth and rising credit costs. However, we now expect banks to start posting

growth from H2FY26 onwards, driven by NIM expansion and higher credit growth as the

credit impulse improves on the back of multiple government measures, making a

stronger structural case for banks. The non-lenders, especially the capital market names,

remain a long-term structural play on rising financialization/equitization of savings.

In contrast, IT services are experiencing a slowdown in demand growth from their

primary market, the US, while the transitional phase of generative AI adoption is

expected to delay clarity regarding service growth.

2) Consumption revival:

The government, after taking cognizance of the need to

stimulate consumption, has embarked on a policy overdrive to announce measures

October 2025

4

Reform. Resilience. Revelry!

Mastering the game!

that can drive higher consumption growth. We believe that all the measures put

together will have a synergistic impact on demand and drive an uptick in consumption

names, along with any derivative of consumption, such as retail lenders, logistics

providers, et al.

3) New-age themes:

While growth has remained a favorite theme for Indian investors,

the market has now broadened enough to offer a reasonably wider choice of

investable universe to investors. Many new-age themes have cropped up in the past

few years, and we recommend strong overweight in some of these themes, such as

quick commerce, renewable energy, mobile app ecosystem-based business models,

etc. At MOFSL too, we have expanded our coverage to include 331 companies, with

several new additions in emerging themes such as quick commerce, renewables, data

centres, high-end discretionary consumption, ER&D, and more.

Indian markets on a strong platform, performance should mean revert

While Indian equities have registered lackluster performance in the past one year

(down ~10% in USD terms since the Sep’24 highs), we continue to highlight that the

Indian markets now appear to be in a healthy state vs. last year, and the platform is set

for Indian equities to mean-revert and post an uptick going forward. The earnings cycle

is bottoming out, with growth likely to pick up into double digits (quarterly PAT growth

of 12%/12% YoY in 3QFY26/4QFY26 and annual PAT growth of 11%/14% YoY in

FY26/FY27). The earnings cut cycle has already started to ease, with the latest quarterly

cuts at a more modest ~1-2% range. Valuations are reasonable, with Nifty trading at

20.6x in line with LPA, and any evidence of earnings growth pickup should help

valuations expand. We believe that the cavalry of measures by the government will

help to reset the trajectory of corporate earnings as domestic reforms are expected to

continue, while any resolution of the tariff stalemate will be a key external catalyst in

our opinion. We see potential for further market upside, especially in an environment

characterized by improving corporate earnings growth, low interest rates, ample

liquidity, and macroeconomic recovery. Our model portfolio is more aligned towards

domestic names, driven by expectations of a domestic economic rebound. While

SMIDs trade at expensive valuations, we continue to focus on this segment, selectively

picking high-conviction SMID names in our portfolio.

Modest expectations for 2Q; Nifty EPS cut 1.1%/1.7% for FY26E/FY27E

We estimate the MOFSL Universe/Nifty-50 earnings to grow 9%/6% YoY in 2QFY26. Ex-

Financials, we expect earnings to increase 16%/10% YoY, whereas ex-Metals and O&G,

we project the earnings to rise 6%/4% YoY for the quarter. The overall earnings growth

is expected to be modest and will be anchored by O&G (+25% YoY), NBFC-Lending

(+21%), Telecom (loss-to-profit), Metals (+10%), Technology (+6%), Cement (+62%),

Capital Goods (+14%), and Healthcare (+10%). These sectors are likely to contribute

95% of the incremental YoY accretion in earnings. Conversely, both Private Banks (-7%)

and PSBs (-7%) are likely to contribute adversely to earnings. Further, we expect FY26

earnings to grow 12% YoY and 9% YoY for the MOFSL Universe and Nifty-50,

respectively. FY26 earnings, ex-Financials, are projected to rise 15% YoY and 11% YoY.

Barring Metals and O&G, FY26 earnings are likely to increase 11% and 9% YoY for the

MOFSL Universe and Nifty-50, respectively. We cut our FY26E/FY27E Nifty EPS by 1.1%/

1.7% and expect it to grow 8%/16% YoY to INR1,096/INR1,274. The Metals, Cement,

BFSI, Auto, and Technology sectors have contributed to the majority of the reduction in

our earnings estimate.

October 2025

5

Reform. Resilience. Revelry!

Mastering the game!

Sectoral PAT growth for the

quarter-ended

Sep’25

(YoY %)

Telecom

Cement

EMS

Real Estate

Logistics

Oil & Gas

Cons. Durables

NBFC - Lending

Retail

Media

Cap. Goods

Staffing

Metals

Healthcare

MOFSL Univ.

Insurance

Technology

Auto

Utilities

Consumer

Chemicals

NBFC - Non Lending

Banks-PSU

Banks-PVT

Infra

Earnings highlights

–

2QFY26E | OMCs to drive the modest earnings growth



LP

62

36

29

26

25

24

21

19

18

14

12

10

10

9

6

6

5

4

3

3

0

-7

-7

-8









MOFSL: Large-/Mid-/Small-cap PAT



growth in 2QFY26 (YoY %)

23.4



14.3

9.1

6.9











We expect earnings of

MOFSL Universe and Nifty to grow 9% YoY and 6% YoY,

respectively, in 2QFY26.

Excluding financials, the earnings are expected to jump

16% YoY and 10% YoY, whereas, excluding global commodities (i.e., Metals and

O&G), the MOFSL Universe and Nifty are likely to report 6% and 4% YoY growth

in earnings, respectively, for the quarter.

The overall earnings growth is expected to be modest and will be anchored by

O&G (+25% YoY), NBFC-Lending (+21%), Telecom (loss-to-profit), Metals (+10%),

Technology (+6%), Cement (+62%), Capital Goods (+14%), and Healthcare (+10%).

These sectors are likely to contribute 95% of the incremental YoY accretion in

earnings. Conversely, both Private Banks (-7%) and PSBs (-7%) are likely to

contribute adversely to earnings.

Sales and EBITDA for the MOFSL Universe are likely to grow 6% and 8% YoY,

while the same for the Nifty are likely to improve 7% YoY and 8% YoY,

respectively. Ex-Commodities, EBITDA for the MOFSL Universe and Nifty is

projected to grow 5% YoY and 6% YoY, respectively.

In 2QFY26, the

MOFSL large-cap/mid-cap/small-cap

universe is likely to register a

PAT growth of 7%/23%/14%, YoY. Moreover, sales for large-/mid-/small-caps are

likely to grow 6%/6%/8% YoY, and their EBITDA would clock 8%/13%/3% YoY

growth for the quarter.

The earnings of the MOFSL

Financial

Universe are expected to dip 1% YoY,

primarily due to the weak performance of both Private and Public banks, offset by

the strong performance of NBFC-Lending. The

Private Banks

sector is projected to

report an earnings decline (of 7% YoY) for the second straight quarter since

Mar’20.

The

PSU Banks

Universe is also likely to report an earnings decline of 7%,

the lowest in 22 quarters. The earnings of the

Insurance

sector are expected to

remain modest at +6% YoY.

NBFC-Lending

is likely to post a strong 21% YoY

earnings growth (the highest in six quarters), while

NBFC Non-lending

is set to

post a flat YoY growth in earnings

–

the lowest in 13 quarters.

The earnings of the

O&G

Universe are likely to jump 25% YoY, led by OMCs. This

marks the second quarter of growth after five consecutive quarters of decline.

The

Telecom

universe is likely to clock profits (for the fourth successive quarter)

of INR23b in 2QFY26 (vs. a loss of INR15b in 2QFY25 and a profit of INR16b in

4QFY25), mainly fueled by continued improvement in margins of Bharti Airtel.

The

Metals

universe is projected to report a modest profit growth of 10% YoY.

The

Cement

universe is expected to report a strong earnings growth of 62% YoY

in 2QFY26 (over the weak base of 48% earnings decline for 2QFY25). The sector

is likely to clock the second quarter of earnings growth after four consecutive

quarters of significant earnings dip.

The

Capital Goods

sector is projected to report a healthy earnings growth of 14%

YoY. However, the sector would report the second quarter of less than 15%+

earnings growth after 4QFY25.

The

Healthcare

universe is likely to report 10% YoY earnings growth (the lowest

growth in eight quarters), after clocking six quarters of 15%+ earnings growth

until 4QFY25.

The

Real Estate

universe is likely to deliver a strong quarter with earnings

growth of 29% YoY in 2QFY26 over a strong base of 2QFY25.

October 2025

6

Reform. Resilience. Revelry!

Mastering the game!



















The

Technology

sector is likely to register a modest earnings growth of 6% YoY,

the lowest growth in six quarters. This will also mark the ninth quarter of single-

digit profit growth.

The

Auto

sector is likely to report a modest quarter of YoY earnings growth of 5%

in 2QFY26 over a flat base of 2QFY25.

The

Consumer

sector is expected to post a muted earnings growth of 3% YoY,

marking the sixth consecutive quarter of weak earnings print.

The

Chemicals

sector is also likely to report a muted 3% YoY earnings growth

(despite a weak base of 5% YoY earnings dip in 2QFY25). However, this will mark

the third consecutive quarter of earnings growth following a seven-quarter decline.

We expect the EBITDA margin (ex-Financials) to expand 110bp to 17.5% for the

MOFSL Universe. Conversely, for the Nifty-50, EBITDA margin is likely to expand

100bp to 21.1% (ex-Financials) during the quarter.

Sales/EBITDA/PAT of the MOFSL Universe

are expected to report a two-year

CAGR of 6%/5%/4% over 2QFY24 and 2QFY26.

FY26E earnings highlights:

The MOFSL Universe is likely to deliver sales/EBITDA/

PAT growth of 5%/11%/12% YoY. The O&G, NBFC Lending, Metals, and Telecom

sectors are likely to be the key earning drivers with 13%, 23%, 17%, and LP YoY

growth in FY26E, respectively. These four sectors are projected to contribute 49%

of the incremental earnings for the MOFSL Universe in FY26.

Nifty EPS cut for FY26E/27E:

We reduce our FY26E/FY27E Nifty EPS by 1.1%/ 1.7%

and expect it to grow 8%/16% YoY to INR1,096/INR1,274. The Metals, Cement, BFSI,

Auto, and Tech sectors have contributed to the majority of the reduction in our

earnings.

Top ideas: Largecaps:

Bharti Airtel, ICICI Bank, Larsen & Toubro, Mahindra &

Mahindra, Ultratech Cement, Titan Company, Max Healthcare, Bharat

Electronics, Tech Mahindra, TVS Motors, Macrotech, and Indian Hotels.

Midcaps

and Smallcaps

–

Dixon Technologies, SRF, Suzlon Energy, Jindal Stainless,

Coforge, Supreme Industries, Page Industries, Kaynes Tech, Radico Khaitan, VIP

Industries, UTI AMC, Swiggy, and Niva Bupa Health.

Model portfolio: Key changes

Our model portfolio broadly reflects our preference for growth visibility and

domestically focused plays in a still-strained global environment. We anticipate a

gradual recovery in earnings by FY26, and we marginally raise our weights in

domestic names. We discuss the key changes in our model portfolio below:

Our key Overweight (OW) sectors are Autos, Industrials, Healthcare, BFSI, and

Consumer Discretionary, while we are Underweight (UW) on Oil & Gas, Cement, and

Metals. We upgrade Automobiles to OW from Neutral. We have also made several

additions from a bottom-up standpoint across sectors.



FINANCIALS:

We retain our OW stance on the BFSI sector, with differentiation

among its sub-segments. We continue to prefer large private banks, holding the

highest OW position in ICICI Bank, followed by Kotak Bank, albeit we have

trimmed our allocations in both ICICI Bank and Kotak Bank by 100bp each. We

remain marginal OW on PSU banks, with only SBI representing this segment. We

are OW in diversified financials, reflecting our positive long-term outlook on this

theme. While maintaining our allocations to UTI AMC and Niva Bupa, we have

replaced Angel One with Max Financials, assigning a substantial allocation of

October 2025

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Reform. Resilience. Revelry!

Mastering the game!

















300bp. We expect

Max Financials

to outperform in APE growth, product mix,

VNB margin, and RoEV over 2HFY26 and beyond, on the back of a favorable

outlook for the life insurance industry driven by GST rate cuts, interest rate cuts,

and a favorable base of 2HFY25. We project an APE/VNB CAGR of 18%/21%

during FY25-28E and consider the valuations attractive at FY27 P/EV of 1.9x.

CONSUMPTION:

We remain OW on Discretionary, our preferred long-term

theme in consumption, and maintain our UW stance on Staples. We have added

two more names to the Discretionary cohort, i.e., Indigo and V-Mart, with 300bp

and 100bp allocations, respectively. We have partially funded these additions by

replacing Jubilant Foodworks, while we have maintained allocations in Titan,

Radico Khaitan, Indian Hotels, and Page Industries at the same levels as last

quarter.

Indigo

is a key beneficiary of the surge in travel demand. It has demonstrated

resilience through cost control, strong network execution, and steady passenger

growth. Backed by early double-digit capacity growth, stable yields, a rising

international mix (currently ~30% of ASKs), and improving operating leverage

(from reduced damp leases and expanding wide-body routes), INDIGO is well-

positioned to sustain healthy profitability.

V-Mart

remains a formidable beneficiary of the unorganized-to-organized shift

and rising preference for one-stop shops, which provide a wider assortment at

competitive prices in Tier 2+ towns.

TECHNOLOGY:

We remain Neutral on Technology, within which we are UW on

IT services but OW on quick commerce, which offsets the services underweight.

Within IT services, we continue to prefer mid-cap players owing to their better

growth vs. the large-cap peers. Coforge and Hexaware are our key mid-cap IT

picks with unchanged allocation at 200bp. TechM is the sole large-cap IT name

in our portfolio. We have replaced HCL Tech by adding Swiggy to our model

portfolio with an allocation of 300bp.

Swiggy

is a beneficiary of improved execution and rising QC AOV, which

strengthens growth visibility while easing competition and moderating dark

store expansion, accelerating the path to breakeven.

AUTOMOBILES:

We upgrade Automobiles to OW from Neutral, as the

environment for the auto sector has improved materially over the past few

months, owing to a confluence of multiple enablers such as GST2.0

rationalization, interest rate cuts, higher personal disposable incomes, and

healthy rural demand. We have maintained our existing allocations of

400bp/300bp in M&M and TVS Motors, while adding Happy Forgings to the

portfolio with a 200bp weightage.

Happy Forgings

is our key preferred stock in the auto ancillary space, as it is

second order beneficiary of the expected demand revival at OEMs post-GST 2.0

rate rationalization. Happy Forging’s key customer segments in the domestic

market (CVs and tractors) have picked up in 2Q, holding potential for continued

strong growth. There is no material impact of US tariffs, as its US exposure is

below 3% of revenue, including indirect exports. The stock trades at a palatable

valuation of 27.4x 12-month forward earnings vs. the 10-year average of 34x.

INDUSTRIALS:

This sector remains one of our favorite themes. We maintain our

OW stance in this segment and retain our allocations and stock picks as in the

last quarter, with allocations to L&T, BEL, Ultratech, Dixon Technology, and

Kaynes. Among the sub-segments, we are very optimistic about EMS names, and

8

October 2025

Reform. Resilience. Revelry!

Mastering the game!













hence, the sector is a key OW, as we see a continuation of super-normal growth

in this segment.

HEALTHCARE:

We retain our OW stance on Healthcare, albeit we have changed

the composition by replacing Sun Pharma with Lupin and assigned a 200bp

weightage. We have retained our allocations in Global Health and Dr. Agarwal’s

Health.

Lupin

is expected to post a continuation of strong earnings growth momentum

with expectations of 35%, 26%, and 42% YoY growth in 2Q, 3Q, and 4QFY26,

respectively. It has posted a strong sales growth in the US over the past 14

quarters. Further, LPC has a strong pipeline of products in the

inhalation/injectable space to sustain this growth momentum going forward.

Given its strong anti-diabetes franchise, LPC is gearing up for the launch of

semaglutide in India and is also scaling additional growth drivers in India,

including consumer health, diagnostics, and digital offerings for cardiac patients.

METALS/UTILITIES:

We continue to maintain our UW stance, with exposures

through Jindal Stainless and Suzlon Energy.

OTHERS:

We maintain our OW stance, which in a way signifies the growing

importance of newer, less prominent, and smaller themes. We have replaced

SRF and Macrotech Developers with Delhivery and VIP Industries in this

segment.

Delhivery

is a beneficiary of capacity additions through organic and inorganic

routes, market leadership position, increasing share of high-margin part-truck-

load (PTL) business, and cost efficiency driven by higher scale of operations.

VIP Industries

is now emerging from a strategic reset year with a cleaner

balance sheet, renewed brand investments, and meaningful cost efficiency

gains. We expect the refreshed strategy to be anchored around 1) augmenting

its supply chain efficiency, 2) enhancing employee productivity, 3) divesting low-

profitability brands, 4) expanding retail footprint to high-throughput locations,

and 5) realigning e-commerce discounting.

Note: Exhibit data is sourced from Bloomberg, Companies, and MOFSL research database

October 2025

9

Corporate earnings at a glance: Defensives poised to aid earnings

Resilience. Revelry!

Reform.

growth

Mastering the game!

O&G is likely to lead the charge; excluding Financials, profits are anticipated to grow 16% YoY and 10% YoY for the MOFSL

Universe and Nifty, respectively.

BFSI and Auto would continue to lead, while contributions from Healthcare and Cement to improve

PAT expected to grow 9% YoY for

PAT likely to rise 16% YoY for the

PAT to grow 6% YoY for the MOFSL

the MOFSL Universe

MOFSL Universe, excluding Financials

Universe, sans Metals and O&G

MOFSL Universe

MOFSL Ex Financials

49 49

36

29

MOFSL Ex Metals and O&G

59

57

32

12

4

-4

13

16

33 32

37

24

23

18

15

11 10 9

9

6

21

2

6

11

3

0

6

6

6

10

11

9

-10

-8

-20

PAT growth for the Nifty Universe

anticipated to be only 6% YoY

Nifty Universe

25 24

19

PAT to grow 10% YoY for the Nifty

Universe (ex-Financials)

Nifty Ex Financials

24

21

PAT to grow 4% YoY for the Nifty

Universe (ex-Metals and O&G)

Nifty Ex Metals and O&G

57

16

12 12

15

8

9

6

5 6

6

1

2

7

12

36 33 33

10

8 8

5

2 2

10

26

18 17

11 9

8 7 10

4

Performance of the MOFSL Universe is likely to be driven by O&G, NBFC-Lending, and Telecom but would be weighed

down by Banks in 2QFY26

94 44

38

21

18 17 13

12

12

11

10

9

6

5

5

4

2

1

1

0

0

0

0

28

32

2,893

3,157

October 2025

10

Corporate earnings at a glance:

O&G’s PAT contribution to rise sequentially

Reform. Resilience. Revelry!

Mastering the game!

O&G’s

PAT

contribution one-third share of total profits, though the sequential rise to dip from the highs of 40% in Sep’24

Financials to retain over to the MOFSL Universe shows some signs ofshare continues in 2QFY26, the highest in six quarters

O&G PAT (INRb)

21.6

17.9

13.8

15.1

15.9

15.2

12.5

13.0

21.2

O&G contribution to MOFSL universe PAT (%)

13.4

13.4

14.5

14.9

Financials to retain over one-third share of total profits, though the share continues to dip from the highs of 40% in Sep’24

BFSI PAT (INRb)

41

38

36

BFSI contribution to MOFSL universe PAT (%)

40

34

36

36

38

39

38

37

37

37

MOFSL (ex-OMC)’s

PAT share (%):

Defensives to drive 2QFY26 earnings

32 28

23 29

24

28

24

25

24

24

25

21

24

22

DEFENSIVES

22

23

23

22

22

22

24

21

21

23

22

23

21

24

21

21

21

24

20

24

20

23

36

35

33

33

32

33

GLOBAL CYCLICALS

42

42

44

43

54

54

DOMESTIC CYCLICALS

55

55

56

54

58

55

56

56

57

56

56

45 43

40

36

October 2025

11

Reform. Resilience. Revelry!

Mastering the game!

MOFSL: MODEL PORTFOLIO

SECTOR WEIGHT /

PORTFOLIO PICKS

Financials

Private Banks

ICICI Bank

HDFC Bank

Kotak Mahindra Bank

PSU Bank

SBI

Diversified Financials

Max Financials

Shriram Finance

UTI AMC

Niva Bupa Health

Consumption / Retail

Titan Company

Indigo Aviation

Radico Khaitan

Indian Hotels

Page Industries

V-Mart

Technology

Tech Mahindra

Swiggy

Hexaware Tech.

Coforge

Auto

Mahindra & Mahindra

TVS Motor

Happy Forgings

Energy/Telecom

Reliance Industries

Bharti Airtel

Cap Goods, Infra & Cement

Larsen & Toubro

Bharat Electronics

UltraTech Cement

Healthcare

Lupin

Global Health

Dr Agarwals Health.

Metals / Utilities

Jindal Stainless

Suzlon Energy

EMS

Dixon Tech.

Kaynes Technology

Others

Delhivery

Supreme Inds.

VIP Inds.

TOTAL

BSE 100

34.2

23.3

6.9

10.4

2.2

3.5

2.6

7.5

0.0

0.6

0.0

0.0

13.8

1.0

0.9

0.0

0.5

0.0

0.0

9.5

0.6

0.0

0.0

0.4

7.8

2.2

0.6

0.0

12.5

6.6

3.7

8.8

3.1

1.1

1.0

4.3

0.3

0.0

0.0

7.4

0.0

0.5

0.5

0.5

0.0

1.2

0.0

0.0

0.0

100

MOFSL

WEIGHT

34.0

21.0

9.0

9.0

3.0

4.0

4.0

9.0

3.0

3.0

2.0

1.0

13.0

3.0

3.0

2.0

2.0

2.0

1.0

10.0

3.0

3.0

2.0

2.0

9.0

4.0

3.0

2.0

9.0

5.0

4.0

8.0

4.0

2.0

2.0

6.0

2.0

2.0

2.0

4.0

2.0

2.0

4.0

2.0

2.0

3.0

1.0

1.0

1.0

100

WEIGHT

RELATIVE

TO BSE100

-0.2

-2.3

2.1

-1.4

0.8

0.5

1.4

1.5

3.0

2.4

2.0

1.0

-0.8

2.0

2.1

2.0

1.5

2.0

1.0

0.5

2.4

3.0

2.0

1.6

1.2

1.8

2.4

2.0

-3.5

-1.6

0.3

-0.8

0.9

0.9

1.0

1.7

1.7

2.0

2.0

-3.4

2.0

1.5

3.5

1.5

2.0

1.8

1.0

1.0

1.0

EFFECTIVE SECTOR

STANCE

Neutral

Underweight

Buy

Buy

Buy

Neutral

Buy

Overweight

Buy

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Buy

Buy

Buy

Neutral

Buy

Buy

Buy

Buy

Overweight

Buy

Neutral

Buy

Underweight

Buy

Buy

Neutral

Buy

Buy

Buy

Overweight

Neutral

Buy

Buy

Underweight

Buy

Buy

Overweight

Buy

Buy

Overweight

Buy

Buy

Buy

PAT YoY / CAGR (%)

FY26E

FY27E

FY28E

FY25-

FY27

10

7

-5

2

27

12

7

-37

30

18

57

14

11

429

27

Loss

26

59

22

33

6

12

61

22

14

27

32

25

41

19

18

48

88

116

8

LP

12

12

15

19

18

18

21

16

133

19

11

28

22

15

64

28

Loss

16

28

19

20

24

10

40

19

20

34

2

25

38

23

78

59

62

25

34

288

18

17

16

22

18

11

19

18

93

19

12

23

11

13

47

12

Loss

15

23

13

16

32

10

32

19

19

21

3

21

53

10

6

31

48

33

20

45

18

11

11

6

10

22

17

11

21

24

15

42

18

13

195

27

Loss

21

43

21

27

15

11

50

21

17

31

16

25

39

21

45

53

74

64

21

LP

15

October 2025

12

Reform. Resilience. Revelry!

Mastering the game!

MARKETS

Nifty-50: Remains positive in

CY25YTD

Nifty-50 YoY return (%)

29

15

24

12

3

3

A year of range-bound market movement…

…led

by robust DII flows, offsetting sharp FII outflows amid global volatility



20

4

9

4

-4



Nifty Midcap-100 remained nearly

flat

YoY return (%)

47

22

6 7

4

-4

-15

-1

46

47

24



Nifty Smallcap-100 underperforms

in CY25YTD

YoY return (%)

57

59

56

24



21

7 2

-10

-29

-14

-6

A range-bound market lacking a clear trend:

Indian equities have remained

broadly range-bound over the past year, posting only marginal gains in CY25YTD,

though they are slightly down from the

Sep’24 highs.

Heightened global tariff

headwinds, geopolitical uncertainties, and sharp FII selling were offset by strong

DII inflows, which helped prevent deeper drawdowns. Repeated tariff

announcements from Trump during the quarter, without resolution, contributed

to increased volatility following a recovery in 2QCY25. Although up 4% YTD, the

Nifty-50

closed 6% below its Sep’24 peak,

while the Nifty Midcap-100 and

Smallcap-100 declined 7% and 10% (down 1% and 6% YTD), respectively. Over

longer periods, the Nifty-50 has delivered a CAGR of 13%/17%/12% across 3-year,

5-year, and 10-year horizons.

India underperforms global peers in CY25:

Despite showing resilience, India

underperformed most major global markets in CY25YTD, many of which staged

sharper recoveries from a low CY24 base. South Korea (+50%), Brazil (+41%),

Germany (+36%), MSCI EM (+25%), the UK (+23%), France (+22%), Taiwan (+21%),

Japan (+20%), China (+19%), the US S&P500 (+14%), and Russia (+13%) all

outpaced India’s flat performance (0%)

in USD terms.

Mid- and small-cap outperformance narrows:

Following a strong 2023-24, mid- and

small-cap stocks have continued to underperform

since the Sep’24 highs and over

the past nine months. As of Sep’25, the Nifty Midcap-100

and Smallcap-100 indices

were down 7% and 10% from their all-time highs, while the Nifty-50 declined 6%.

Weak earnings and valuation concerns triggered a sharp sell-off in small-cap stocks,

while mid-caps delivered relatively stronger earnings growth, helping to moderate

their valuations. Nevertheless, small-cap valuations remain stretched, mid-caps

appear overvalued, and large-caps trade near their long-term averages.

DII flows set a record; FIIs remain net sellers:

DII inflows remain robust, aided

by resilient monthly SIP contributions of above USD3b and rising retail

participation. Record DII inflows of USD 66.7b in the first nine months of CY25

have already surpassed the total inflows for the entire CY24. Meanwhile, global

uncertainties, the

impact of Trump’s aggressive reciprocal

tariffs, and the start

of interest rate cuts have driven stronger FII flows in global markets (excluding

India), resulting in record net outflows of USD 17.5b from Indian equities. While

retail participation and DII momentum are expected to stay strong, geopolitical

developments, stable currency, and a recovery in domestic earnings will be key

factors shaping FII flows into India. Any progress or resolution regarding trade

tariffs could positively influence FII sentiments going forward.

October 2025

13

Reform. Resilience. Revelry!

Mastering the game!

Exhibit 1:

Indian market remains range bound, the Nifty-50/Midcap-100/Smallcap-100 declined 6%/7%/9% YoY since Sep'24

27,500

25,811

25,500

24,611

24,256

Nifty-50 (down 6% YoY)

Nifty Midcap-100 (down 7% YoY)

Nifty Smallcap-100 (down 9% YoY)

(rebased to Nifty-50)

23,500

21,500

19,500

23,635

Exhibit 2:

Performance of global equity indices in USD terms (%): India underperforms global peers in CY25YTD

50

41

36

25

23

CY25YTD change (%)

22

21

20

19

14

13

0

South

Korea

Brazil

Germany MSCI EM

UK

France

Taiwan

Japan

China

S&P 500

Russia

MICEX

India -

Nifty

Exhibit 3:

Over the last 12 months, the global market cap has increased 15.6% (USD19.5t),

whereas India’s market cap has

declined 10% to USD5.1t

13.0

27

2.3

23

3.0

21

70.2

17

3.0

15

7.5

3.7

0.9

Mkt cap chg 12M (%)

0.8

5.1

Curr Mcap (USD Tr)

13

9

7

-1

-10

China

Korea

Taiwan

US

Germany

Japan

UK

Indonesia

Brazil

India

Exhibit 4:

Trend in India’s contribution to the global market cap (%) –

moderates from the

Mar’25

high and hovers around 3.5%

5.1

4.2

3.3

2.4

1.5

India's Contribution to World Mcap (%)

4.6

3.6

3.5

Average: 2.8%

1.6

October 2025

14

Reform. Resilience. Revelry!

Mastering the game!

Exhibit 5:

FII registers the highest outflow in a year…

Net FII (USD b)

23.4

14.2

3.8

32.2

21.4

22.3

6.0

Exhibit 6:

…while

DII inflows continue to hit record highs

Net DII (USD b)

62.9

66.7

15.9

-0.8

-4.6

-17.0

12.1

-5.0

-17.5

Exhibit 7:

FII flows have weakened in the past three months

Net FII (USD b)

Exhibit 8:

DII flows have been robust for the last 26 months

Net DII (USD b)

Valuations for Nifty-50 above LPA, while broader markets remain elevated





Nifty is trading at a 12-month forward P/E of 20.6x, near its own LPA. We expect

FY26/FY27 EPS to grow 8%/16% to INR1,096/INR1,274.

India’s market cap-to-GDP

ratio has been volatile, dropping to 57% (of FY20

GDP) in Mar’20 from 80% in FY19. Since then, it has remained

above the long-

term average of 87%, reaching a multi-year

high of 146% in Sep’24. Following

the market correction and subsequent recovery, the ratio now stands at 125%.

We expect nominal GDP to grow 10.5% YoY in FY26 vs. 9.8% growth in FY25.

Exhibit 9:

Nifty-50 down 6% YoY but up 4% in CY25YTD; it is trading near to its LPA

29,000

23,000

Sep'15-25:

Nifty CAGR: 11.8%

Avg P/E: 20.7x

Nifty Index

Nifty P/E (x)

29.0

24,611

25.0

21.0

20.6

17.0

7,949

13.0

17,000

19.2

11,000

5,000

October 2025

15

Reform. Resilience. Revelry!

Mastering the game!

Exhibit 10: The 12-month forward Nifty P/B (x)

4.1

3.5

2.9

10 Year Avg: 2.8x

2.3

1.7

12.2

10.5

Exhibit 11: The 12-month forward Nifty RoE (%)

17.3

3.1

15.6

13.9

10 Year Avg: 13.8

15.1

Exhibit 12:

Valuations, though below their peak, remain elevated for SMIDs, while aligning with averages for the Nifty-50

38

Mar'15-Mar-25 P/E(x)

Nifty-50 avg : 20.7x

Nifty Mid-cap 100 avg : 23.0x

Nifty Smallcap 100 avg : 16.6x

Nifty-50 P/E (x)

Nifty Midcap-100 P/E(x)

Nifty Smallcap- 100 PE (x)

32

26

Nifty50 trade at a premium

26.4

24.7

20.6

20

14

Nifty Mid-cap 100 and Nifty Small-cap 100 trade at a

premium to Nifty-50

8

Exhibit 13:

India’s market cap-to-GDP

ratio dips from the 17-year high levels of 146% in FY25, and stands at 125% in FY26YTD

GFC: Peak of 149% in Dec’07

Nominal GDP growth in FY25/FY26E:

9.8%/10.5%

Lowest since

the GFC

129 126 125

105

84

84

56

97

Average of 87% for the period

103 113

97

90

82

71

64

66

69

79

84

80

57

October 2025

16

Reform. Resilience. Revelry!

Mastering the game!

2QFY26 PREVIEW

OMCs to drive earnings, while Private Banks to drag the same

MOFSL (ex-Commodities) earnings likely to grow 6% YoY



The

Auto

OEMs within our coverage universe are expected to deliver a 13% YoY

volume growth in 2QFY26 (after a weak 1Q).

Among the listed companies, 2W/CV

OEMs posted volume growth of 15%/10% in 2Q. Aggregate PV growth for the four listed

OEMs stood at just 3% YoY. For our OEM coverage universe (excl. TTMT), revenue is

likely to grow 13% YoY on the back of healthy volume growth. Similarly, excl. TTMT,

EBITDA/PAT for our coverage universe may decline by 13%/15% YoY. For auto ancillaries

under our coverage, we expect ~9% growth in revenue but a much slower 3% growth in

both EBITDA/PAT in 2QFY26.





Of the 18 major

sectors under

MOFSL Coverage,

only 10 are likely

to witness an

expansion in

EBITDA margin on

a YoY basis





BFSI:

We expect a weak (-1% YoY) adj. earnings growth for our BFSI universe, mainly

due to the weak performance of both Private Banks (-7% YoY) and PSBs (-7%), along

with flat earnings growth of NBFC Non-lending companies. NBFC lending (+21%)

and Insurance (+7%) are likely to post healthy earnings growth. We estimate NII for

our banking coverage universe will decline 0.9% YoY/1.8% QoQ, while PPoP is also

expected to dip 5.5% YoY/14% QoQ. For the private banks under our coverage, we

estimate PPoP to decline 2% YoY/18% QoQ. PSU banks’ PAT

is likely to dip 7.1% YoY

(-1.9% QoQ) in 2QFY26E, due to a contraction in NIM and moderation in treasury

gains for most PSBs. NII is likely to decline 2.5% YoY (-1.7% QoQ).

NBFCs:

We estimate ~14% YoY growth each in NII/PPoP in 2QFY26 for our NBFC

coverage universe, and PAT is expected to grow ~18% YoY (excl. Poonawalla).

Excluding NBFC-MFI and PFL, we estimate ~14% YoY growth in PAT for our

coverage

universe. We estimate loan growth of ~16% YoY/~4% QoQ as of Sep’25

for our coverage universe. AUM growth is estimated at ~12% YoY for our coverage

HFCs, including affordable and large HFCs. Vehicle financers (VFs) are projected to

report ~17% YoY AUM growth. Gold lenders (including non-gold products) are

likely to record ~29% YoY growth (primarily driven by ~44% YoY growth by

MUTH). NBFC-MFIs are estimated to post a decline of ~20% YoY in AUM, while

diversified lenders are expected to deliver ~24% YoY growth in AUM. Asset quality

stress persisted in the unsecured MSME and micro-LAP segments, with credit

costs anticipated to edge higher and deterioration in VFs to be mainly driven by

monsoon-related disruptions. However, asset quality was stable for HFCs and

power financiers with no material resolutions or incremental slippages in 2QFY26.

NBFC Non-lending:

We estimate the aggregate PAT of our Non-Lending

Financials Universe at INR138b, which reflects a modest 4% YoY increase but a

sharp 19% sequential decline. Within this, the capital market segment is

expected to post PAT of INR35b, largely flat on a YoY basis. Exchanges and

brokers are expected to post a modest 1% YoY decline in PAT (due to Angel

One). For AMCs, EBITDA is likely to rise 10% YoY, aided by robust AUM growth.

Intermediaries are likely to see a soft quarter, with PAT declining 9% YoY.

Wealth managers are likely to deliver the strongest performance within capital

market plays, with PAT growth of 9% YoY. While life insurance companies are

projected to deliver INR96b, reflecting healthy 7% YoY growth, their VNB

margins are likely to face some sequential pressure. In contrast, general

insurance players are likely to report INR8b, implying a 4% YoY decline.

The

Technology

sector (IT services companies) is expected to post a muted

quarter with no material improvement over the past quarter. We expect QoQ

growth in CC terms in the range of 0.3% to 2.4% for large-caps and -0.5% to

6.0% for mid-caps. We expect aggregate revenue for our coverage universe to

17

October 2025

Reform. Resilience. Revelry!

Mastering the game!

Sectoral sales growth for the quarter-

ended

Sep’25

(YoY %)

EMS

Real Estate

Cement

Utilities

Telecom

Cap. Goods

Logistics

NBFC - Lending

Retail

Cons. Durables

Insurance

Healthcare

NBFC - Non Lending

Technology

Media

MOFSL Univ.

Consumer

Chemicals

Infra

Auto

Metals

Banks-PVT

Oil & Gas

Banks-PSU

Staffing

25

23

19

16

16

15

15

15

11

10

10

9

9

6

6





6

6

5

5

4

4

1

0

-3

-5





Sectoral PAT growth for the quarter-

ended Sep’25

(YoY %)

Telecom

Cement

EMS

Real Estate

Logistics

Oil & Gas

Cons. Durables

NBFC - Lending

Retail

Media

Cap. Goods

Staffing

Metals

Healthcare

MOFSL Univ.

Insurance

Technology

Auto

Utilities

Consumer

Chemicals

NBFC - Non…

Banks-PSU

Banks-PVT

Infra

LP

62

36

29

26

25

24

21

19

18

14

12

10

10



9

6

6

5

4

3

3

0

-7

-7

-8



grow by 6.0% YoY, while EBIT and PAT are likely to grow by 5.2% and 5.5% YoY

(all in INR terms), respectively.

The

Capital Goods

coverage companies are expected to report revenue growth

of 15% YoY, EBITDA growth of 11% YoY, and PAT growth of 14% YoY. Ordering

activity during the quarter remained strong yet selective, with traction seen

across defense, power T&D, renewables, thermal, hydrocarbon, and buildings &

factories segments. Although the sector has seen positive developments, a

broad-based revival in government and private capex is yet to be seen. We

maintain our view that valuation rerating for the sector is contingent upon a

broad-based capex revival.

The MOFSL

Consumer

universe is likely to deliver a modest revenue/EBITDA

growth during the quarter (staples: +5%/0%, paints & adhesives: +3%/+10%,

liquor: +9%/+10%, innerwear: +6%/+6%, QSR: +10%/-13%, and jewelry: +16%/

+24%).

Staple

companies are expected to see massive benefits from GST 2.0,

but the trade transition has been impacting primary growth in the interim. We

expect modest PAT growth of 2% YoY for staple companies in 2QFY26. The PAT

growth for the Paints/Liquor/Innerwear/QSR/Jewelry segments during the

quarter is estimated to be ~8%/13%/6%/-1%/29% YoY in 2QFY26.

The

Healthcare

companies under our coverage are expected to report a modest

Sales/EBITDA/PAT growth of 9%/8%/10% YoY in 2QFY26. The domestic

formulation (DF) segment growth is likely to moderate due to the GST transition.

Intensified competition in certain products is expected to curb YoY growth in the

US generics. Hospitals, however, remain on a robust growth path due to the

addition of beds and improvement in acquired units, driving 14.5% YoY EBITDA

growth for 2QFY26.

The

Metal

companies within our coverage universe are likely to report a modest

10% YoY earnings growth. Sales/EBITDA for the coverage to grow by 4% and

11% YoY. We expect

ferrous

companies to report a volume growth of 7% QoQ

(+11% YoY), which would be partially offset by a lower NSR of 7% QoQ and 5%

YoY, resulting in flat revenue QoQ (+6% YoY) in 2QFY26.

Non-ferrous

companies

under our coverage are expected to post an aggregate revenue and EBITDA

decline of 2% and 3% QoQ, respectively, mainly led by muted volumes.

We estimate our

Cement

coverage universe (ex-JSWC) to post 17%/52%/60%

YoY growth in revenue/EBITDA/PAT, albeit on a low base. Aggregate cement

volume is estimated to grow ~11% YoY to 92mt, aided by inorganic growth.

However, on a like-for-like basis, volume growth stood at ~5% YoY in 2QFY26.

Blended realization is estimated to grow ~5% YoY (down ~2% QoQ) to

INR5,446/t, led by pricing gains in Apr-May’25,

which partially declined in Jun-

Jul’25. We estimate EBITDA/t to rise ~40% YoY (down ~20% QoQ) to INR867.

Average EBITDA margin (ex-GRASIM) is estimated to expand 4.0pp YoY (contract

3.6pp QoQ) to ~16%. Cement prices, after witnessing a marginal correction in

Jun-Jul’25,

largely remained

stable in Aug-Sep’25,

despite

the intense monsoon

season. However, post-GST rate cuts, the cement players have passed on the full

benefits to the customers.

We expect the

O&G

sector to report flat sales YoY (+4% YoY excluding OMCs),

EBITDA growth of a 23% YoY rise in EBITDA (+9% YoY excluding OMCs), and a

25% YoY increase in PAT (+2% YoY excluding OMCs) in 2QFY26. In 2QFY26, crude

oil prices remained steady as oversupply and weak demand were balanced by

geopolitical risk and an

aggressive increase in China’s crude imports and

18

October 2025

Reform. Resilience. Revelry!

Mastering the game!











stockpiling.

OMCs:

Standalone EBITDA for HPCL/BPCL/IOCL is expected to

decline QoQ due to contraction of marketing margins on a QoQ basis. SG GRM

averaged USD4.1/bbl in 2Q (vs. USD5.6/bbl in 1Q).

CGDs:

We estimate an

8%/7% YoY volume growth for MAHGL/IGL and a 1% YoY volume decline for

GUJGA. CGD margins are expected to decline sequentially as raw material costs

rise. Spot LNG prices remained elevated despite a sequential decline, averaging

around USD11.9/mmBtu in 2Q.

Upstream:

For ONGC and OINL, we expect O&G

sales volumes to remain largely flat both QoQ and YoY, while oil realizations are

likely to see a sharp YoY decline for both companies (flat QoQ).

The

Power Utility

companies under our coverage universe are anticipated to

report a revenue/EBITDA/Adj. PAT growth of 16%/17%/4% YoY in 2QFY26.

India’s overall power generation fell by 3.2% YoY in 2QFY26 to 448.7BUs

mainly

on account of softened demand due to a stronger-than-average monsoon.

However, the share of renewables in the generation mix improved to 21% from

17%. During Apr-May’25,

the country added a significant 7.9GW of renewable

capacity

–

largely solar

–

while 2.1GW of thermal capacity was added.

Retail:

2QFY26 is likely to be a steady quarter for retailers, with a boost from the

early festive season and GST rationalization offset by the transitory impact of GST

implementation in the wholesale channel and weather-related disturbances in

certain pockets. However, festive demand and GST cuts led to a pick-up in demand,

and retailers remain optimistic that demand revival will be sustained beyond the

festive season. We expect ~14% YoY aggregate revenue growth for our retail

coverage universe, with a more broad-based growth as several retailers are likely to

post double-digit revenue growth. Large retailers (DMart and Trent) continue to

deliver resilient 15%+ growth, value fashion retailers (VMM and V-Mart) continue to

outperform with 20%+ revenue growth, and footwear retailers are expected to see

modest growth recovery (+6% YoY in 2QFY26, vs. ~2% YoY decline in 1QFY26).

Telecom:

We expect the Telecom sector to report a profit of INR23b in 2QFY26

(vs. a loss of 15b in 2QFY25). We also project ~2% sequential growth in

combined wireless revenue/EBITDA for the three private telcos in 2QFY26. We

build in a ~1% sequential uptick in the blended ARPU for the three private

telcos. The subscriber net adds trend for the private telcos is expected to remain

stable QoQ. Given the consolidated market structure in the Indian telecom

industry, higher data consumption, lower ARPU, and inadequate returns

generated by telcos, we expect at least one more tariff reset. We continue to

build in a ~15% tariff hike (or INR50/month on the

base plan) in Dec’25.

The

Real Estate

coverage universe is expected to report strong presales of

INR275b in 2QFY26, up 19% YoY but down 38% QoQ due to seasonality impact.

Volumes are expected at 20msf, up 6% YoY and down 27% QoQ. Revenue

recognition for our coverage is expected to stand at INR172b (up 23% YoY), with

EBITDA of INR53b (up 44% YoY) and a margin of 31%. Adj. PAT is expected to rise

29% YoY to INR44b, with an adj. PAT margin of 26%.

The

Chemicals

sector is projected to report a third consecutive quarter of

earnings growth (albeit modest) at 3% YoY in 2QFY26 after seven consecutive

quarters of decline.

Brent crude prices averaged USD68/bbl in Sep’25 (vs.

67.9/bbl in Aug’25). Oil prices remained

stable MoM despite oversupply and

weak demand. This stability was established due to geopolitical risk and an

aggressive increase in China’s crude imports and stockpiling.

October 2025

19

Reform. Resilience. Revelry!

Mastering the game!









The 2QFY26 snapshot:

We expect EBITDA/PBT/PAT to rise 8%/6%/9% YoY in

2QFY26 for the MOFSL Universe. Excluding Metals and O&G, EBITDA/PBT/PAT

for the MOFSL Universe would grow 5%/2%/6% YoY.

The

EBITDA margins

of the Cement, Consumer Durables, EMS, Infrastructure,

Logistics, Metals, O&G, Retail, Telecom, and Utilities sectors are likely to expand,

while EBITDA margins of the Automobile, Capital Goods, Chemicals, Consumer,

Healthcare, Media, Real Estate, and Technology sectors are anticipated to contract

on a YoY basis.

Nifty earnings to grow 6% YoY in 2QFY26:

Ex-Commodities, the Nifty earnings

are anticipated to rise ~4% YoY. Reliance Industries, Bharti Airtel, TATA Steel, JSW

Steel, and Bajaj Finance are likely to drive Nifty earnings, while ONGC, SBI, Axis

Bank, Tata Motors, and Hindalco are projected to drag the same.

The FY26E snapshot:

The MOFSL Universe and Nifty are likely to record 12% YoY

and 9% YoY earnings growth in FY26E, respectively. FY26 earnings, ex-Financials,

are projected to rise 15% YoY and 11% YoY. Barring Metals and O&G, FY26

earnings are likely to increase 11% and 9% YoY for the MOFSL Universe and

Nifty-50, respectively.

October 2025

20

Reform. Resilience. Revelry!

Mastering the game!

Exhibit 14:

MOFSL and Nifty Universe to post 9% and 6% YoY earnings growth, respectively, in 2QFY26 (INR b)

Sales

Sector

Sep-25

PAT growth sectors

10,543

Telecom (5)

787

Others (26)

795

Cement (12)

607

EMS (7)

192

Real Estate (14)

172

Logistics (9)

204

Oil & Gas (14)

7,088

Consumer Durables (5)

184

NBFC - Lending (24)

515

Med/Low growth sectors

15,221

Retail (24)

684

Media (3)

48

Capital Goods (15)

1,154

Staffing (4)

114

Metals (11)

2,932

Healthcare (27)

959

Insurance (8)

2,049

Technology (16)

2,133

Automobiles (26)

3,173

Utilities (8)

847

Consumer (21)

952

Chemicals (13)

177

PAT de-growth sectors

1,895

NBFC - Non Lending (15)

81

Banks-PSU (6)

861

Banks-Private (12)

916

Infrastructure (3)

37

MOFSL Universe (328)

27,659

MOFSL Ex OMCs (325)

23,989

MO Ex Metals and O&G (303) 17,639

MOFSL Ex. Financials

23,238

Nifty (48)

14,036

Sensex (30)

10,799

Growth (%)

YoY

QoQ

5

-4

16

2

15

5

19

-10

25

3

23

16

15

2

0

-6

10

-8

15

2

7

3

11

2

6

5

15

14

-5

5

4

-3

9

3

10

15

6

4

4

-1

16

6

6

-2

5

4

0

-2

9

5

-3

-2

1

-2

5

-15

6

0

7

2

9

3

6

-1

7

1

7

1

EBITDA

Sep-25

2,123

400

105

85

10

53

70

958

19

423

2,425

73

10

143

3

526

228

59

473

375

290

211

32

1,328

42

601

675

11

5,876

5,646

4,393

4,077

3,631

2,961

Growth (%)

YoY

QoQ

22

-2

20

2

17

-16

55

-28

31

1

44

47

17

-1

23

-4

28

-3

14

8

6

1

11

-3

1

11

11

18

-20

15

11

-10

8

1

-1

41

6

5

-4

-1

17

9

2

-5

5

-2

-5

-14

4

6

-9

-9

-2

-18

7

-12

8

-4

6

-3

5

-3

13

-2

8

-4

8

-3

PAT

Sep-25

914

23

24

35

5

44

42

470

13

256

1,439

30

7

97

2

224

141

104

327

233

105

149

18

805

35

365

401

3

3,157

3,051

2,463

1,997

1,943

1,579

Growth (%) PAT Delta PAT

Delta

YoY

QoQ

INRb Share (%)Share (%)

33

-1

229

29

87

LP

44

38

1

14

228

-43

17

1

6

62

-29

13

1

5

36

7

1

0

1

29

30

10

1

4

26

-2

9

1

3

25

-1

94

15

36

24

-5

2

0

1

21

5

44

8

17

7

-5

95

46

36

19

-2

5

1

2

18

15

1

0

0

14

16

12

3

5

12

20

0

0

0

10

-21

21

7

8

10

0

12

4

5

6

-23

6

3

2

6

2

18

10

7

5

2

11

7

4

4

1

4

3

2

3

-5

5

5

2

3

-4

0

1

0

-7

-5

-60

25

-23

0

-4

0

1

0

-7

-2

-28

12

-11

-7

-7

-32

13

-12

-8

-27

0

0

0

9

-4

264

100

100

6

-2

178

6

-2

150

16

-3

274

6

-3

104

8

-1

111

October 2025

21

Reform. Resilience. Revelry!

Mastering the game!

Exhibit 15:

Expect a two-year PBT/PAT CAGR of 3%/4% for the MOFSL Universe (INR b)

PBT (INR b)

Sector

Automobiles (26)

Capital Goods (15)

Cement (12)

Chemicals (13)

Consumer (21)

Consumer Durables (5)

EMS (7)

Financials (65)

Banks-Private (12)

Banks-PSU (6)

Insurance (8)

NBFC - Lending (24)

NBFC - Non-Lending (15)

Healthcare (27)

Infrastructure (3)

Logistics (9)

Media (3)

Metals (11)

Oil & Gas (14)

Oil Ex OMCs (11)

Real Estate (14)

Retail (24)

Staffing (4)

Technology (16)

Telecom (5)

Utilities (8)

Others (26)

MOFSL Universe (328)

MO Ex Metals and O&G (303)

MOFSL Ex OMCs (325)

Nifty (48)

Sensex (30)

Sep-23 Sep-24 Jun-25 Sep-25 YoY

302

102

58

24

195

13

3

1,339

527

411

102

270

28

143

6

34

12

264

846

494

24

33

2

381

-1

119

33

3,933

2,823

3,581

2,368

1,887

311

124

30

24

193

15

8

1,538

564

539

107

282

46

173

6

41

8

305

523

492

30

33

2

421

31

133

17

3,967

3,139

3,936

2,557

2,067

304

123

72

25

210

19

7

1,600

542

543

153

315

47

184

6

49

8

404

672

458

41

42

2

431

71

141

53

4,465

3,388

4,251

2,741

2,221

309

-1

140

13

48

61

24

3

199

3

18

22

8

2

1,418 -8

533

-6

493

-9

16

-85

331

18

45

-1

188

9

5

-23

51

23

9

16

329

8

660

26

518

5

51

67

40

23

3

10

442

5

79

153

140

5

38

119

4,199 6

3,209 2

4,056 3

2,686 5

2,208 7

Growth (%)

Two-year

QoQ

CAGR

1

1

17

14

-9

-34

1

-2

1

-5

17

-5

65

5

3

-11

1

-2

9

-9

-60

-89

11

5

26

-3

15

2

-9

-26

22

4

-11

10

12

-19

-12

-2

2

13

46

24

10

-4

12

28

8

2

LP

12

9

0

7

-29

3

-6

7

-5

6

-5

7

-2

8

-1

PAT (INR b)

Sep-23 Sep-24 Jun-25 Sep-25 YoY

221

72

42

19

145

9

2

1,031

409

294

98

207

22

110

3

29

8

198

614

348

19

25

2

282

-40

84

25

2,899

2,088

2,634

1,728

1,361

222

85

22

18

145

10

4

1,171

433

393

98

212

35

129

4

33

6

204

376

356

34

25

2

309

-15

100

7

2,893

2,313

2,873

1,838

1,468

229

84

50

19

157

14

5

1,216

430

372

134

243

36

141

5

43

6

283

474

312

34

31

2

321

16

104

43

3,276

2,519

3,114

1,997

1,602

233

5

97

14

35

62

18

3

149

3

13

24

5

36

1,161 -1

401

-7

365

-7

104

6

256

21

35

0

141

10

3

-8

42

26

7

18

224

10

470

25

364

2

44

29

30

19

2

12

327

6

23

LP

105

4

24

228

3,157 9

2,463 6

3,051 6

1,943 6

1,579 8

Growth (%)

Two-year

QoQ

CAGR

3

2

17

16

-8

-29

-1

-4

2

-5

18

-5

56

7

6

-5

-1

-7

11

-2

3

-23

11

5

26

-4

13

0

2

-27

20

-2

-6

15

6

-21

-12

-1

2

17

51

30

11

-2

10

20

8

2

Loss

44

12

1

0

-43

4

-4

9

-2

8

-2

6

-3

8

-1

Sales/PAT for the MOFSL Universe to grow 6%/9% YoY in 2QFY26

Exhibit 16:

Expect sales for the MOFSL Universe to grow 6%

YoY in 2QFY26

Exhibit 17: Expect MOFSL Universe earnings to grow 9% YoY

in

2QFY26

3

October 2025

22

Reform. Resilience. Revelry!

Mastering the game!

Exhibit 18: Expect EBITDA margin (ex-Financials and OMCs)

to expand 40bp YoY to 19.7% in 2QFY26

Average: 20.3%

Exhibit 19: Expect PAT margin (ex-Financials and OMCs) to

expand 30bp YoY to 9.7% during the quarter

Average: 9.9%

Source: MOFSL, excluding Financials and OMCs

Source: MOFSL, excluding Financials and OMCs

Exhibit 20:

O&G, NBFC-Lending, and Telecom to lead, while Banks, Infra, and NBFC Non-Lending to drag earnings in 2QFY26

94 44

38 21 18 17 13 12

12 11 10 9

6

5

5

4

2 1

1

0

0

0

0

28 32

2,893

3,157

Exhibit 21:

Quarterly sectoral PAT trend (INR b)

–

MOFSL Universe to report a 9% YoY growth in PAT in 2QFY26E

Sector

Automobiles

Banks-Private

Banks-PSU

Insurance

NBFC - Lending

NBFC

–

Non- Lend

Capital Goods

Cement

Chemicals

Consumer

Consumer Durables

EMS

Healthcare

Infrastructure

Logistics

Media

Metals

Oil & Gas

Real Estate

Retail

Staffing

Technology

Telecom

Utilities

Others

MOFSL Universe

Sep-22 Dec-22 Mar-23 June-23 Sep-23 Dec-23 Mar-24 June-24 Sep-24 Dec-24 Mar-25 June-25 Sep-25E

97

142

186

187

221

240

261

237

222

236

283

229

233

301

338

369

363

409

414

436

427

433

420

410

430

401

226

252

300

307

294

306

379

347

393

378

412

372

365

178

83

158

113

98

112

159

127

98

134

214

134

104

150

163

184

188

207

205

226

215

212

215

235

243

256

19

17

18

21

22

23

27

31

35

31

31

36

35

54

58

99

54

72

70

134

71

85

86

144

84

97

20

24

38

44

42

50

51

32

22

21

50

50

35

24

22

25

20

19

16

15

17

18

13

18

19

18

128

132

135

149

145

149

144

154

145

141

143

157

149

7

9

11

10

9

9

13

14

10

11

18

14

13

2

2

4

2

2

2

4

3

4

4

7

5

5

98

89

81

99

110

106

118

126

129

130

138

141

141

4

4

5

5

3

4

5

4

4

4

6

5

3

24

21

28

27

29

32

31

34

33

37

41

43

42

5

6

3

6

8

6

4

6

6

7

5

6

7

143

137

250

234

198

245

216

273

204

252

311

283

224

294

339

516

621

614

463

487

370

376

415

472

474

470

15

20

32

18

19

22

38

30

34

35

41

34

44

22

27

16

22

25

33

21

24

25

38

24

31

30

2

2

2

2

2

2

1

2

2

2

2

2

2

267

289

292

276

282

291

299

301

309

318

320

321

327

-41

-58

-19

-29

-40

-32

-25

-17

-15

12

5

16

23

83

89

101

87

84

98

107

94

100

104

116

104

105

10

47

50

54

25

46

43

41

7

55

65

43

24

2,128 2,252 2,884 2,877 2,899 2,911 3,196 2,963 2,893 3,100 3,510 3,276 3,157

October 2025

23

Reform. Resilience. Revelry!

Mastering the game!

Expect earnings of Nifty constituents to rise 6% YoY in 2QFY26







We expect sales/EBITDA/PBT/PAT for Nifty constituents to improve 7%/8%/

5%/6% YoY.

Reliance Industries, Bharti Airtel, TATA Steel, JSW Steel, and Bajaj Finance are likely

to drive Nifty earnings, while ONGC, SBI, Axis Bank, Tata Motors, and Hindalco are

projected to drag the same.

Thirteen Nifty companies are likely to report a PAT growth of above 15% YoY.

Whereas 13 Nifty companies are expected to report a YoY decline in PAT.

Exhibit 22:

Sector-wise PAT breakdown for the Nifty constituents in 2QFY26E (YoY %)

66

Telecom, Cement

and Logistics are

likely to lead Nifty

earnings in 2QFY26

30

28

22

22

17

11

6

6

6

5

5

4

2

1

-3

-9

Loss

Exhibit 23:

Expect Nifty’s revenue to

grow 7% YoY in 2QFY26

Exhibit 24:

Expect Nifty’s EBITDA to grow 8% YoY

Exhibit 25:

Expect Nifty’s

PAT to rise 6% YoY

Exhibit 26:

Nifty’s

EBITDA margin to expand to 21.1% YoY

Average: 21.5%

October 2025

24

Reform. Resilience. Revelry!

Mastering the game!

Exhibit 27:

Nifty’s earnings snapshot

for 2QFY26E (INR b)

Sales

Growth (%) EBITDA Growth (%)

PAT

Growth (%)

Contribution to PAT

Company

Sector

Sep-25

YoY QoQ Sep-25 YoY

QoQ Sep-25

YoY

QoQ

(%)

growth (%)

Bajaj Auto

Automobiles

147

11.8 16.6

29

10.7

18.3

24

9.0

15.2

1.2

1.9

Eicher Motors

Automobiles

61

42.6 20.6

16

42.9

29.2

14

31.1

19.7

0.7

3.3

Mahindra & Mahindra Automobiles

329

19.5

-3.4

46

16.9

-5.5

43

11.8

24.5

2.2

4.3

Maruti Suzuki

Automobiles

384

3.2

0.0

40

-9.5

0.1

33

8.1

-10.6

1.7

2.4

Tata Motors

Automobiles

926

-8.8 -11.3

78

-33.9 -20.2

23

-31.4

-42.2

1.2

-10.1

Axis Bank

Banks-Private

132

-2.3

-2.9

103

-3.4 -10.1

55

-20.0

-4.7

2.8

-13.3

HDFC Bank

Banks-Private

308

2.3

-2.0

254

2.8

-28.9

167

-0.5

-7.8

8.6

-0.9

ICICI Bank

Banks-Private

211

5.5

-2.3

173

3.6

-7.5

119

1.7

-6.5

6.1

1.9

Kotak Mahindra Bank Banks-Private

73

4.2

0.8

53

4.5

-4.2

33

-2.3

-0.4

1.7

-0.7

State Bank

Banks-PSU

406

-2.5

-1.2

269

-8.0 -11.8

167

-9

-12.7

8.6

-15.4

HDFC Life Insur.

Insurance

191

13.1 28.7

10

9.2

26.6

5

9.7

-13.1

0.2

0.4

SBI Life Insurance

Insurance

235

15.2 32.0

16

8.9

44.9

5

2.7

-8.5

0.3

0.1

Bajaj Finance

NBFC - Lending

108

21.7

5.1

89

21.2

4.3

49

21.8

2.6

2.5

8.4

Bajaj Finserv

NBFC - Lending

332

19.9 15.8

95

20.3

1.5

29

36.9

2.3

1.5

7.4

Shriram Finance

NBFC - Lending

60

10.7

4.8

44

10.7

5.2

22

5.8

1.6

1.1

1.2

Bharat Electronics

Capital Goods

53

14.7 19.0

14

3.8

16.2

11

2.4

15.3

0.6

0.3

Larsen & Toubro

Capital Goods

715

16.2 12.3

70

9.8

10.6

39

14.3

7.3

2.0

4.7

Grasim Industries

Cement

92

21.0

0.0

3

-1.6 -16.8

8

2.6

LP

0.4

0.2

Ultratech Cement

Cement

185

18.2 -13.2

31

51.8 -30.6

13

56.2

-43.2

0.7

4.4

Asian Paints

Consumer

81

1.0

-9.3

14

9.0

-16.9

9

3.8

-18.8

0.5

0.3

Hind. Unilever

Consumer

163

2.1

-1.5

36

-3.8

-1.9

26

-1.8

1.1

1.3

-0.5

ITC

Consumer

217

4.6

0.9

69

2.1

1.2

53

5.6

0.6

2.7

2.7

Nestle

Consumer

54

5.3

5.4

12

0.3

6.9

7

-6.2

13.0

0.4

-0.5

Tata Consumer

Consumer

48

13.6

0.2

6

1.2

4.4

4

-3.0

11.7

0.2

-0.1

Apollo Hospitals

Healthcare

61

9.8

5.0

9

9.1

4.5

4

15.5

1.0

0.2

0.6

Cipla

Healthcare

73

4.0

5.4

18

-3.2

2.7

13

0.6

0.9

0.7

0.1

Dr Reddy’ s Labs

Healthcare

86

6.7

0.1

20

-8.4

-6.2

13

-1.1

-5.1

0.7

-0.1

Max Healthcare

Healthcare

26

22.7

6.0

7

16.4

7.0

4

17.6

17.4

0.2

0.6

Sun Pharma

Healthcare

140

5.9

1.9

40

5.0

-0.8

30

4.2

1.1

1.6

1.2

Adani Ports

Logistics

87

22.5

-5.2

52

19.5

-5.0

32

28.3

-6.1

1.6

6.7

Coal India

Metals

299

-2.6 -16.6

85

18.6 -23.7

63

-0.6

-28.5

3.2

-0.3

Hindalco

Metals

637

9.5

-0.8

75

-5.3

-5.6

36

-14.8

-9.2

1.9

-6.1

JSW Steel

Metals

431

8.5

-0.2

64

18.4 -15.0

15

140.3

-29.1

0.8

8.7

Tata Steel

Metals

568

5.4

6.8

85

54.5

14.9

28

514.9

30.2

1.4

22.3

ONGC

Oil & Gas

325

-4.1

1.5

185

1.6

-0.7

100

-16.5

24.8

5.2

-18.9

Reliance Inds.

Oil & Gas

2,467

6.5

1.3

458

17.2

6.7

202

22.1

11.9

10.4

35.0

Titan Company

Retail

164

12.6

-1.0

18

20.0

0.0

12

23.6

5.5

0.6

2.1

Trent

Retail

48

18.0

-0.4

8

19.7

-8.5

4

1.9

2.1

0.2

0.1

HCL Technologies

Technology

316

9.6

4.3

65

1.6

7.2

43

2.7

13.1

2.2

1.1

Infosys

Technology

444

8.2

4.9

107

8.5

6.6

72

10.2

3.5

3.7

6.3

TCS

Technology

654

1.8

3.1

173

3.1

2.5

126

5.0

-2.1

6.5

5.7

Tech Mahindra

Technology

139

4.1

3.8

21

18.8

7.5

13

4.7

14.8

0.7

0.6

Wipro

Technology

228

2.4

3.1

45

0.4

3.9

31

-2.2

-5.8

1.6

-0.7

Bharti Airtel

Telecom

511

23.1

3.2

287

31.3

3.0

65

66.1

9.2

3.3

24.8

NTPC

Utilities

453

12.4

6.5

118

22.4

15.2

44

3.9

-1.1

2.2

1.6

Power Grid Corp.

Utilities

107

4.2

7.7

92

4.9

13.6

37

6.2

7.0

1.9

2.1

Eternal

Others

81

68.0 12.5

3

39.3 173.8

3

70.3 1,099.0 0.2

1.2

Interglobe Aviation Others

183

7.9

-10.6

26

8.5

-54.6

-7

Loss

PL

-0.3

3.1

Nifty Universe

14,036

7.0

1.5

3,631

7.8

-4.2

1,943

5.7

-2.7

100

100

Note: For Banks: Sales = Net Interest Income, EBITDA = Operating Profits; For Life Insurance: Sales = Net Premium, EBITDA = VNB.

October 2025

25