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We remain constructive on India on the back of RBI’s monetary easing and earnings recovery in 2HFY26. Valuation comfort has eroded, although prospects of an earnings recovery keep us positive on overall markets. We trim our tech exposure to ‘Neutral’ after the smart recovery, and add Dixon and Indigo in our model portfolio revamp.

Stock Screeners

We have run two screeners against Emkay Coverage and the Consensus Universe. For GARP, we have filtered stocks with FY26E EPS growth higher than the FY19-25 CAGR, 1Y forward PER higher than the mean, and the average FY19-25 RoE higher than 15%; key ideas in the Emkay Universe are Ashok Leyland, Dabur, Senco Gold, and TCI Express. For the Consensus Universe, the key ideas are Dabur in large-caps, Tata Technologies, Honeywell Automation, and Page Industries in mid-caps, and TCI Express, Senco Gold, and Symphony, in small-caps (refer to Exhibits 1-4 for the exhaustive list). We have also run three earnings-momentum screeners – 1) Stocks with FY26 EPS estimate change higher than 10% in the last 1M. Key ideas from the Consensus Universe are One97 Communications, SAIL, Sudarshan Chemical, Power Finance, Gujarat State Petronet, and VRL Logistics. 2) Stocks in the Emkay Coverage with a more than 15% price target hike from 1-Apr-25 to 20-Jun-25. Key ideas are Marico, Bandhan Bank, eClerx, Navin Fluorine and JK Tyre. 3) Stocks in the Consensus Universe with a more than 25% target price hike from 1-Apr-25 to 20-Jun-25. Key ideas are Mazagon Dock, Solar Industries, Bharat Dynamics, Data Patterns, Astra Microwave, Bajaj Finance, Poonawalla Fincorp, and RBL Bank.

Changes in the Emkay Model Portfolio

i) We introduce Dixon to the Emkay portfolio, to play the hyper-growth momentum in the EMS segment. There are near-term uncertainties on tariffs and the PLI regime is coming to an end, though we think the recent underperformance presents an opportunity to buy. ii) We trim our pharma exposure and add Max Healthcare at the expense of Lupin. We are playing the strong earnings resurgence in FY26, despite the high valuations for Max. iii) We lower our stance to ‘Neutral’ in Technology, after the strong rally. We exit the underperforming exposure in TCS, and add Mphasis instead. iv) We reduce our cement exposure as we believe midcaps are a better way to play the sector, and exit Shree Cement. v) In NBFCs, we are reducing our exposure in Shriram and Power Finance on lack of triggers, and add CIFC, looking at earnings momentum over valuations. vi) We add Indigo as we believe crude prices will cool off in the near term and see strong growth momentum, especially with the addition of the Navi Mumbai and Jewar airports.

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