Motilal Oswal’s India Strategy Analyzed

Indian companies are starting to show better profits than before, and this is good news. A report from Motilal Oswal Financial Services Ltd (MOFSL) shows that companies are upgrading their earnings forecasts – meaning they’re predicting they’ll make more money. This is a change after a time when companies were reporting less money.

Key Points

• First profit upgrades in five quarters seen for Indian companies.
• FY26 profit estimates rose 2% for MOFSL’s stock portfolio.
• Mid-cap stocks saw biggest earnings upgrades (3.1%).
• Small-cap stocks continued to have downgrades (5.5%).
• Large-cap stocks led upgrades, with sectors like Oil & Gas up.
• Attractive valuations and policies suggest a positive market outlook.

The good news is that companies are now predicting they’ll make more money than they were before. This increase of 2% in the overall profit estimates for the MOFSL’s stocks shows a positive trend. This is the first time companies have upgraded their profit forecasts since Q1 of 2025, which had negative readings.

Some companies, particularly mid-sized ones (called “mid-caps”), saw the biggest improvements in their profit predictions – they think they’ll earn 3.1% more. However, smaller companies (“small-caps”) are still struggling, with their profit predictions going down by 5.5%. It’s like some companies are doing better than others.

Several important industries are doing well. For example, companies in the Oil & Gas, Telecom, and PSU Banks sectors are predicting higher profits. But some industries, like Utilities (things like electricity) and Autos (cars and trucks), are having a harder time.

The government and banks have been helping companies by giving them more money and support. This has helped companies make better predictions about their profits. Experts believe that earnings growth could reach 12% to 15% in the next two years.

It’s important to remember that India’s economy isn’t growing as fast as some people would like (around 10%). But analysts say that even if the economy doesn’t grow super quickly, companies can still make a lot of money because they can control their costs and prices.

Right now, the stock market in India seems like a good place to invest, especially in large companies. The stock market is trading at a reasonable price, and there are good reasons to think things will get better. Investors are looking at companies like Bharti Airtel, ICICI Bank, and Infosys.

Investing in Indian markets presents opportunities driven by improving corporate earnings, supportive policies, and attractive valuations.