Kotak Equities sees Indian shares faring higher in 2026 on 3 components; provides Dixon, raises IndiGo weight
The brokerage stated calendar 12 months 2025 delivered “so-so” returns for traders, regardless of sturdy home inflows, tax cuts and authorities help. Markets have been weighed down by elevated valuations, earnings downgrades, weak revenue development and restricted curiosity from overseas portfolio traders, even because the Nifty-50 index gained about 9% 12 months up to now. Massive-cap shares outperformed mid-caps and small-caps, whereas efficiency different sharply throughout sectors.
Kotak stated it expects 2026 to mark a turning level, underpinned by three key components: a stronger earnings outlook, a restoration in home consumption demand following GST and income-tax cuts and decrease rates of interest, and a extra supportive macro surroundings. The brokerage additionally pointed to the opportunity of a greater exterior backdrop, together with progress on an India–U.S. commerce deal and a stabilisation within the rupee after a pointy deterioration within the commerce stability.
“We count on CY2026 to be a greater 12 months because of (1) higher earnings outlook, (2) improved home consumption demand, and (3) seemingly steady macro,” Kotak Equities stated.
Portfolio reshuffle: provides and will increase
In opposition to this backdrop, Kotak made a number of modifications to its really useful mannequin portfolio. It added Dixon Applied sciences with a weight of 150 foundation factors, citing long-term development drivers regardless of current share-price weak point.
“DIXON inventory trades at 51X FY2027E EPS and 37X FY2028E EPS and can seemingly ship 37% EPS CAGR over FY2026E-30E,” Kotak Equities stated, noting that joint ventures in digital camera and show modules and advantages from the federal government’s production-linked incentive scheme ought to help future development.
The brokerage additionally raised its weight on IndiGo by 50 foundation factors to 180 foundation factors after the inventory corrected about 15% over the previous month on issues round short-term earnings dangers from operational disruptions.
“We don’t see any significant change in Indigo’s dominant place in India’s aviation sector,” the brokerage stated.
As well as, Kotak added Aadhar Housing Finance to the portfolio with a 150 foundation level allocation, pointing to cheap valuations and regular development prospects.
“Aadhar inventory trades at 2.3X FY2027E BV and 2X FY2028E BV and can ship FY2027E RoE of 16.7% and FY2028E RoE of 17.5%,” it stated, even because it acknowledged modest asset-quality deterioration in current quarters.
Trims and exits: Torrent, Airtel, Reliance
However, Kotak eliminated Torrent Prescription drugs from the portfolio, saying the inventory has carried out properly over the previous 12 to 36 months and that it sees “higher alternatives elsewhere” at present valuations. The brokerage additionally trimmed weights on Bharti Airtel and Reliance Industries as a part of a broader rebalancing train, whereas growing its allocation to Mahindra & Mahindra.
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Wanting forward: selective positioning stays key
Kotak expects Nifty-50 web earnings to develop 18% in FY2027E and 15% in FY2028E, with diversified financials, metals and mining, oil and fuel, and telecommunications providers contributing the majority of incremental earnings. Nonetheless, it cautioned that a number of pockets of the market stay costly, underscoring the necessity for selective positioning even because the broader earnings cycle turns extra beneficial.
(Disclaimer: Suggestions, strategies, views and opinions given by the specialists are their very own. These don’t characterize the views of the Financial Instances)
