Motilal Oswal's Gautam Duggad Expounds on India's Earnings Trajectory, Valuations, and Top Stock Picks

Gautam Duggad, Head of Research - Institutional Equities at Motilal Oswal Financial Services, expressed optimism about India's earnings trajectory, expecting 12-14% earnings growth in FY26. Despite a flattish FY25, Duggad pointed out that the country's valuation will track the underlying earnings growth, suggesting that India may not be cheap, but not expensive either. The expert analyst attributed the improvement in macros, such as GDP at 6.5% and inflation down to 3%, to the revival of corporate earnings.

Key Takeaways:

• Gautam Duggad expects 12-14% earnings growth in FY26, driven by a strong earnings revival in the midcap space, with 17-18% CAGR over the next two years.
• India's valuation will track the underlying earnings growth, with Duggad stating that the market will broadly follow the earnings trajectory.
• Midcaps outperformed smallcaps in FY25, delivering 19% growth versus an expectation of 10%, and Duggad anticipates that this trend may continue, with midcaps potentially remains expensive due to the earnings delivery.
• Value can be found in financials, private banks, PSU banks, NBFCs, healthcare, technology, select consumer discretionary, auto, and telecom, with some sectors like hotels, real estate, EMS, and consumer durables appearing expensive on a 1-year forward PE multiple basis.
• Motilal Oswal's top conviction bets in banking include ICICI Bank, Kotak Mahindra Bank, HDFC Bank among large caps, and AU Small Finance Bank and Federal Bank in the midcap space.
• The research firm has added stocks such as Angel, BSE, Keynes, UltraTech, SRF, Suzlon, Kotak, Titan, Indian Hotel, Page Industries, Bharti, M&M, TVS Motor, and Bharat Electronics and Hindustan Aeronautics to its model portfolio.

Statistics:

• India's GDP is expected to be 6.5% in FY26.
• Inflation is expected to be 3% in FY26.
• Motilal Oswal expects 12-14% earnings growth in FY26.
• Midcaps delivered 19% growth vs expectation of 10% in FY25.
• Smallcaps declined 16% vs forecast of 11% in FY25.
• India's market cap is $5 trillion.
• Rs 5 lakh crores ($60 billion) was raised through various fund-raising instruments in FY26.

Sources:

• Gautam Duggad, Head of Research - Institutional Equities at Motilal Oswal Financial Services.
• Financial Express.
• Contify.com.