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Earnings Slowdown Looms: Top Stock Picks Revealed
16 Apr
Summary
- Earnings growth to sharply decelerate in Q4.
- PSU banks, defence, and capital markets are top picks for FY27.
- Midcap companies expected to outperform large caps.
Gautam Duggad of Motilal Oswal Financial Services forecasts a sharp earnings slowdown for the fourth quarter, with projected PAT growth of only 10% for the MOFSL coverage universe, down from 18% in Q3. Duggad has consequently reduced FY26 earnings estimates across his coverage, with mid and smallcaps seeing steeper cuts for FY27.
Despite the slowdown, Duggad remains optimistic about specific sectors for fiscal year 2027, highlighting PSU banks, defence stocks, and capital market plays as his top recommendations. He observes that midcap companies are poised to outperform large caps due to underlying structural growth differences.
Duggad's investment strategy shifts consumption preferences towards discretionary names like Titan and Indian Hotels, moving away from traditional FMCG staples. He also expresses strong conviction in India's capital markets ecosystem over the next decade, suggesting a basket approach to investments.
The overarching message emphasizes evolving portfolio construction, moving away from traditional benchmarks. Duggad suggests that future winners will likely be found in discretionary consumption, capital markets, defence, and new-age platforms.
