Overview
Morgan Stanley released its post‑earnings season stock recommendations for the first quarter of fiscal year 2027 in India, highlighting both overweight and underweight positions.
Overweight Recommendations
The bank listed Adani Ports, Divi’s Lab, Eternal, Grasim, Hyundai, ICICI Bank, Leela and Titan as its preferred overweight stocks, indicating a positive outlook on these companies following the quarter’s results.
Underweight Recommendations
Conversely, Morgan Stanley advised an underweight stance on Bajaj Auto, Cipla, Dabur, Dalmia, Havells, SBI Cards and Wipro, reflecting concerns over earnings or sectoral pressures.
Aggregate Performance of Covered Companies
Excluding public‑sector undertakings, companies in Morgan Stanley’s coverage universe reported a 17 % increase in revenue, a 13 % rise in EBITDA and a 15 % jump in net profit for Q1 FY27. These growth rates exceeded the bank’s internal expectations by 7 percentage points for revenue, 8 points for EBITDA and 10 points for net profit. More than 60 % of the firms beat the analysts’ estimates. Margins contracted for a second consecutive quarter after three years of expansion, though the decline was milder than anticipated.
Index‑Level Results
For the Sensex and Nifty indices, revenue growth outperformed expectations by 3 percentage points, while net profit growth surpassed forecasts by 8 and 9 percentage points respectively. The earnings growth recorded was the strongest in the past ten quarters.
Broader Market Context
Across the broader market, year‑over‑year revenue grew 22 % and net profit rose 12 %, with margins narrowing by 170 basis points. Seven of the ten sectors covered posted positive earnings growth.
Outlook for FY2028
Morgan Stanley projects earnings growth for the Sensex in fiscal year 2028 at 13.5 %, compared with consensus estimates of 14.6 % and the bank’s own top‑down estimate of 16.3 %.