As markets wrap up the Q4 results season for the financial year 2026, Motilal Oswal highlighted that Indian corporate earnings showcased widespread outperformance across aggregates, with commodity strength driving the broad-based beat to estimates.

In its latest Indian strategy report, Motilal Oswal Financial Services said that aggregate earnings of the companies under its coverage grew 16% year-on-year, beating its estimate of 8% growth in the January-March quarter of FY26. According to the domestic brokerage, the better-than-expected earnings growth was powered by BFSI (profit grew 18% YoY vs. brokerage’s estimate of 11%) and supported by metals (profit surged 50% YoY vs. brokerage’s estimate of 24%) and OMCs (profit jumped 62% YoY vs. brokerage’s estimate of 7% growth). Further, technology (+13% YoY), telecom (+8.4x YoY), and automobiles (+13% YoY vs. brokerage’s estimate of 6% decline) propelled earnings, Motilal added.

On the other hand, aggregate earnings growth was dragged by oil & gas (excluding OMCs), which posted a profit dip of 10% YoY vs. Motilal’s estimate of 1% growth.

The Nifty 50 companies delivered 4% YoY growth in net profit, beating Motilal’s estimate of 2% growth. The domestic brokerage, however, noted that Nifty reported a single-digit earnings growth for the eighth consecutive quarter, the first time since the pandemic (June 2020).

“Barring Reliance Industries, which posted a profit dip of 13% YoY, and Interglobe Aviation, which posted a loss of Rs 24 billion vs. a profit of Rs 30.7 billion YoY, the Nifty Universe posted a 9% YoY earnings growth. Five Nifty companies – Bharti Airtel, JSW Steel, HDFC Bank, Infosys, and TCS – contributed 75% of the incremental YoY accretion in earnings. Conversely, Reliance Industries, Interglobe Aviation, Adani Enterprises, Power Grid, Dr Reddy’s, Cipla, Tata Motors PV, Sun Pharma, and Maruti Suzuki dragged down earnings. Within the Nifty, 15 companies reported lower-than-expected profits, while 18 posted a beat, and 17 registered in-line results,” Motilal added.

Also read: IndiGo soars 5% after Q4 results. What Goldman Sachs, Jefferies and others are saying

Largecaps, midcaps beat estimates, smallcaps post in-line earnings

The domestic brokerage noted that among the companies under its coverage, around 90 largecap companies on average posted an earnings growth of 12% YoY. Around 101 midcap companies, meanwhile, showed improvement and delivered earnings growth of 36% YoY (vs. the brokerage’s estimate of 25%).
“Multiple mid-cap sectors, such as BFSI, metals, OMCs, and healthcare, lifted the overall performance. These sectors contributed ~89% of the incremental YoY accretion in earnings. In contrast, smallcaps (168 companies) delivered in-line performance, with earnings rising 19% YoY (our estimate of +18%). Within small-caps, 68% of the coverage universe exceeded/met our estimates. Conversely, within the large-cap/mid-cap universes, 74%/73% of the companies exceeded/met our estimates,” Motilal Oswal said.
It noted that Nifty EPS for FY26 stood at Rs 1,065 per share, marking a second consecutive year of single-digit growth. It cut its Nifty EPS estimate for FY27 by 0.9% to Rs 1,235 per share, led by SBI, Reliance Industries, JSW Steel, ONGC, and Coal India. “Earnings estimates of the MOFSL Universe were cut by 1.3% for FY27, fueled by PSU Bank, Oil & Gas, Healthcare, Telecom, and Technology. The MOFSL large-cap universe reported an earnings cut of 0.9%, while the mid-cap universe recorded a downgrade of 2.2%, and the MOFSL small-cap universe posted a downgrade of 2.8% for FY27,” it added.

Q4 earnings season fared better than expectations

Motilal concluded by saying that the Q4 earnings season fared better than expectations, but forward earnings revisions continue to exhibit weakness. Following India’s sharp underperformance in FY26 and record FII outflows, a favorable base has likely been set for Indian equities, it said, adding that in the near term, however, the market will remain hostage to volatile developments arising from the West Asian crisis.
“Higher commodity prices will be the key monitorables, as a prolonged elevated level could affect India’s macro parameters and engender a tight monetary policy stance. Our model portfolio broadly reflects our preference for growth visibility, structural domestic growth plays, and select global value names. We firmly believe that this is a bottom-up market, despite India witnessing both time and price corrections relative to EM peers. Our key overweight sectors are Autos, PSU Banks, Diversified Financials, Manufacturing & Industrials, Consumer Discretionary, and New-age platforms. In contrast, we are underweight on Oil & Gas, Private Banks, Metals, Consumer Staples, IT, and Commodities/Utilities,” the brokerage said.

Also read: PSU bank stocks vs private banks in FY27: The valuation trap you need to avoid

Motilal Oswal’s top picks

It listed Bharti Airtel, State Bank of India (SBI), ICICI Bank, Mahindra & Mahindra (M&M), Titan, Bharat Electronics (BEL), Eternal, Tata Steel, Infosys and IndiGo as its top Nifty 50 picks, while non-Nifty 50 picks included TVS Motor Company, ICICI Prudential AMC, Groww, Indian Hotels, AU Small Finance, Dixon Tech, Lenskart, Waaree Energies, Coforge, Radico Khaitan and Delhivery.

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