The domestic brokerage, in its latest India Strategy note, said that the upcoming Q4 earnings season will reflect the impact of the prolonged closure of the Strait of Hormuz. It expects companies in its coverage universe to report softer earnings growth of 10% YoY in Q4 FY26, lower than the 18% growth recorded in Q3 and 15% in Q2 of the same financial year.
Financials to post strongest earnings growth
Meanwhile, Motilal expects earnings of Nifty 50 companies, excluding financials, to grow 4% YoY in the fourth quarter, and 5% YoY excluding global commodities (metals and oil & gas). It added that overall earnings growth will be anchored by financials, led by non-banking financial companies (NBFCs), which are expected to post earnings growth of 30% in Q4 FY26.Metals are expected to follow with 27% YoY earnings growth, followed by private banks (12%), telecom (11x YoY jump in profit), technology (11%), and automobiles (12%). Retail (47%), EMS (17%), and consumer (10%) companies are also expected to report healthy double-digit growth during the quarter.
However, the brokerage expects public sector banks’ contribution to moderate, with earnings growth of 2% YoY. Capital goods, consumer durables, and cement are expected to see declines in earnings of 6%, 5%, and 1%, respectively, on a YoY basis in Q4 FY26.
The expected softer growth in Q4 is largely attributable to the impact of higher crude oil and gas prices across energy and crude derivative-consuming sectors, Motilal said. It added, “This is also reflected in our earnings revisions, as the trend of positive revisions over the past two quarters reversed in March 2026.”
Motilal, however, expects Nifty 50 companies to post a 13% growth in sales and a 9% rise in EBITDA. “We have reduced our FY26E/FY27E/FY28E Nifty EPS estimates by 2.0%/1.3%/1.3% and expect earnings to grow 5%/18%/16% YoY to Rs 1,060/Rs 1,246/Rs 1,440. Automobiles, capital goods, logistics, technology, and utilities have contributed the most to the downward revision in our FY26 earnings estimates,” it said.
Markets and war
As FY26 draws to a close and markets transition into FY27, Indian equity markets stand at a pivotal juncture—supported by several tailwinds yet weighed down by geopolitical headwinds stemming from the ongoing Iran-Israel-US conflict, the brokerage said.
“Prima facie, the Indian equity market should benefit from a favourable base year characterised by multiple fiscal and monetary accommodative measures, progress on trade agreements, improved aggregate demand conditions, better-than-expected GDP prints, relative underperformance versus EM peers, and sustained retail investor participation,” it added.
“However, despite these positives, the near-term market setup has been disrupted by the Iran-Israel-US war and its impact on the Indian economy and corporate earnings, given that a significant portion of India’s energy imports passes through the Strait of Hormuz (35–40% of crude demand and 54% of pre-war LPG needs),” the brokerage noted.
The firm said its base case assumes the war will not persist for several months or quarters. After witnessing sharp underperformance in 2025, Indian markets have declined in line with other EM peers following the onset of the conflict.
“This suggests that despite relatively lower valuations, the Indian market is not a top-down market, and portfolios should be constructed on a bottom-up basis with a focus on earnings visibility. Given the current valuation levels, where downside appears limited, any upside will be driven by earnings growth. Consequently, we recommend investing in companies with strong earnings visibility that have seen reasonable valuation correction,” it added.