Q2 FY 26 Probability of earning growth: Motilal Oswal’s Sneha Poddar

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Q2 FY 26 Probability of earning growth: Motilal Oswal’s Sneha Poddar

Motilal Oswal Financial Services Research, VP, Sneha Poddar, says that after showing Q4 better than expected, the market can enter the period of consolidation.

According to him, the second half of the FY26 is likely to catch the actual earnings, the following is expected. Until then, markets can see a limited sidewalk as they wait for fresh triggers to emerge.

Quotes edited from chat:

Do you think the earning season was better than largercaps for the middle and smaller app? Is it the reason behind the influence of the widespread market?

Sneha Podar: It’s hard to point out, but the stock-specific exhibition came out of a few pockets where the numbers were better than expected. Mostly, compared to the Nifty, the wider market has performed relatively better. There may be several reasons – overlay demand was not as poor as fear, and companies tried to improve profitability. The prices of raw materials remained relatively stable.

Price pressure was not even visible, which helped to move metal companies. Overall, the demand, and earning was a little better than expected.

The stock reaction is influenced by more than just earning. Previously, the spirit was negative at local and globally, but the background has now become more positive. After such a sharp improvement, pullback was expected.

There is a point of view in the market that we are going through the time improvement phase. Price correction has occurred, but time improvements can last longer. Will you agree?

Sneha Podar: Yes, I believe it will last longer. Most of the recovery achievement has already happened. From here, there is a limited side of the side, and the market is likely to unite until new triggers emerge – and it will not take time. While earnings were better, H1FY 26 are expected to be with similar lines. It is mostly from H2 that we expect the base effect kicks, which causes strong reappovery achievement numbers.

Regarding the trade war, it is likely to continue for at least three months. No bilateral deal has happened yet. It will take time to settle things, and that is why the time improvement phase will continue. The market is expected to be integrated around the current levels.

As far as earnings, do you think that due to the base effect of FY 25, the FY 26, will improve things?

Sneha Podar: Yes, the Q1 is expected to be the same as 1 Q4. Then in Q2, we can see a bottom, and from there, the recovery should begin. However, the main growth will be seen in H2.

In Q1, do you expect a wave of downgrades, especially in the last three quarters but not so much in Q4 – hang?

Sneha Podar: Hope, yes. If you look at global trends, the Chinese economy has shown a slight improvement, and the stimulus measures helped stabilize the situation with the support of the government. The tariff war seems to be on hold for now. Otherwise, companies would have improved their logistics strategy and search for new markets, which could disrupt their full cost structure.

So from that point of view, nothing has changed drastically for companies. We believe the downgrade ratio of upgrades will be more or less stable.

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