Motilal Oswal raises Nifty EPS, expects steady earnings momentum ahead

Motilal Oswal Financial Services (MOFSL) has marginally raised its Nifty earnings per share (EPS) estimates for FY26 and FY27 after a stronger-than-expected Q2FY26 earnings season, led by commodities and mid-cap companies.

 

The brokerage now pegs the Nifty FY26 EPS at ₹1,101 (from ₹1,096 earlier) and FY27 EPS at ₹1,278 (from ₹1,274), reflecting modest upgrades driven by better performances at HDFC Bank, Tata Steel, UltraTech Cement, Dr. Reddy’s Laboratories (DRL), and Shriram Finance.

 

“The Nifty EPS for FY26E was raised marginally to ₹1,101 (from ₹1,096) due to upgrades in HDFC Bank, Tata Steel, UltraTech Cement, Dr. Reddy’s Labs, and Shriram Finance. The FY27E EPS was raised by 0.3 per cent to ₹1,278 (from ₹1,274),” said Gautam Duggad, Abhishek Saraf, Deven Mistry and Aanshul Agarawal of Motilal Oswal, in a note dated November 3, 2025.  ALSO READ | Outlook dims: 72% of Nifty50 firms brace for EPS downgrades in FY26

 

Q2 results so far

 

The revision follows a broadly positive earnings trend so far this season. As of October 31, 2025, 151 companies from the MOFSL Universe and 27 Nifty constituents have released quarterly results, accounting for 65 per cent and 64 per cent of their respective estimated FY26 profits. These firms represent 42 per cent of India’s total market capitalisation and nearly 70 per cent of the Nifty’s weight.

 

Earnings for the 151 MOFSL Universe companies rose 14 per cent year-on-year (Y-o-Y), above the brokerage’s 9 per cent estimate. Growth was fueled by Oil & Gas (up 79 per cent Y-o-Y), Cement (147 per cent), Technology (8 per cent), Capital Goods (17 per cent), and Metals (7 per cent). Together, these sectors contributed 86 per cent of the incremental earnings accretion. Excluding global commodities such as Metals and O&G, the universe still delivered 6 per cent Y-o-Y growth versus the expected 2 per cent.

 

Within the Nifty, aggregate earnings for the 27 reporting companies rose 5 per cent Y-o-Y (versus an estimate of 6 per cent). HDFC Bank, Reliance Industries, TCS, JSW Steel, and Infosys accounted for the entire incremental growth (122 per cent contribution), while Coal India, Axis Bank, ITC, HUL, and Kotak Mahindra Bank were key drags.

Midcaps shine again

 

Mid-caps stood out once again, extending their outperformance streak to a third straight quarter. Mid-cap earnings surged 26 per cent Y-o-Y (versus estimate of 19 per cent), aided by Technology, Cement, Metals, PSU Banks, Real Estate, and non-lending NBFCs. Large-caps posted 13 per cent growth, matching the overall universe, while small-caps lagged with a 3 per cent Y-o-Y increase amid weakness in Private Banks, Retail, Technology, and Media.

 

On the earnings quality front, 84 per cent of large-cap, 77 per cent of mid-cap, and 69 per cent of small-cap companies reported in-line or better-than-expected results. However, the upgrade-to-downgrade ratio for FY26E stood at 0.7x, with 29 upgrades and 42 downgrades of over 3 per cent each within MOFSL’s coverage universe.

 

Margins also improved materially, analysts noted. The MOFSL Universe (ex-Financials) saw Ebitda margins expand by 170 basis points (bps) Y-o-Y to 16 per cent, driven by gains in Oil & Gas, Technology, Cement, Utilities, and Chemicals. Telecom, Healthcare, Retail, Real Estate, and Media were notable laggards.

 

That said, analysts at MOFSL noted that while large-caps and mid-caps have broadly beaten estimates, small-caps continue to show patchy recovery. 

 

With sectoral earnings momentum holding and commodity-linked profits rebounding, the brokerage sees steady earnings traction heading into the second half of FY26.