Indian equities have become more attractive following a sharp valuation correction, with Motilal Oswal Financial Services (MOFSL) said in a recent report.
The brokerage expects earnings growth to remain healthy despite global uncertainties, although it cautioned that stock selection will be crucial as market performance increasingly depends on individual companies’ earnings trajectories.
MOFSL expects aggregate profit after tax across its coverage universe to grow 22% year-on-year in the September 2026 quarter, marking the highest growth in 11 quarters. Excluding oil marketing companies, earnings are projected to rise 24%, while Nifty-50 earnings are expected to increase 27%.
“India’s ongoing market consolidation, alongside continued earnings recovery from FY25 lows, has led to a sustained cooling in valuations from the highs seen in 2024. Large- and mid-caps have witnessed the steepest valuation corrections of 31% and 36%, respectively, from their respective peaks,” MOFSL said.
It identifying opportunities across banking, financial services, technology, manufacturing, automobiles, consumption and healthcare stocks.
Motilal Oswal’s model portfolio: Stocks to watch
MOFSL’s model portfolio maintains exposure to established companies such as ICICI Bank, HDFC Bank, State Bank of India, Infosys, Larsen & Toubro, Bharat Electronics, Titan Company, Reliance Industries, Bharti Airtel and Apollo Hospitals.
Its portfolio also includes newer and mid-cap opportunities such as Meesho, PhysicsWallah, Jubilant FoodWorks, GE Vernova T&D, Kirloskar Oil Engines, Oberoi Realty, Pearl Global and Fujiyama Power.
The brokerage has an overweight stance on diversified financials, information technology and new-age platforms, manufacturing and industrials, and discretionary consumption. It is underweight on private banks, energy and telecom, and commodities, utilities and renewables, while maintaining a neutral stance on healthcare and automobiles.
In financials, the model portfolio includes ICICI Bank, HDFC Bank, AU Small Finance Bank, RBL Bank, SBI, Shriram Finance, BSE, HDFC Asset Management Company and L&T Finance. Technology and new-age platform holdings include Infosys, Eternal, Meesho, Coforge and PhysicsWallah.
Manufacturing and industrial exposure comprises Larsen & Toubro, Dixon Technologies, Bharat Electronics, GE Vernova T&D and Kirloskar Oil Engines. In consumption, the portfolio includes Titan Company, Jubilant FoodWorks, Radico Khaitan and Indian Hotels, while Mahindra & Mahindra, TVS Motor and Happy Forgings represent its automobile holdings.
The energy and telecom allocation includes Reliance Industries and Bharti Airtel. Hindalco, Waaree Energies and Adani Enterprises feature in commodities, utilities and renewables, while Mankind Pharma and Apollo Hospitals represent healthcare.
The separate mid- and small-cap allocation includes Oberoi Realty, Inventurus Knowledge, Rubicon Research, Pearl Global, Fujiyama Power, PVR Inox and SPR Auto Tech. PVR Inox carries a neutral recommendation in the table, while the other six stocks have Buy ratings.
Earnings growth drives the investment strategy
The brokerage expects its model portfolio to deliver 19% profit growth in FY27 and 14% in FY28, following 13% growth in FY26. Its sector positioning reflects a preference for companies with visible earnings momentum and exposure to long-term domestic growth themes.
MOFSL said, “With valuations well below their peaks, healthy earnings growth, and a resilient macroeconomic environment, we believe the risk-reward profile for Indian equities has improved meaningfully.”
However, the brokerage highlighted global interest rates, energy prices, geopolitical developments and foreign investor flows as key variables for the market. While the valuation correction has improved the entry point in several segments, investors may need to distinguish between companies with sustainable earnings growth and those whose projected growth is driven by a low base.
Here’s a list of 40 stocks in MOFSL portfolio –
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
