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Investing.com - Morgan Stanley (NYSE:MS) analysts expect an earnings recovery for their India coverage universe, projecting revenue growth of 3% and net profit growth of 8% year-over-year, according to a recent report.
The firm forecasts margins will expand further to a two-year high, with nine out of ten sectors expected to deliver positive revenue growth. Communication Services, Industrials and Healthcare are anticipated to lead in revenue growth, while Energy is projected to report a year-over-year decline.
Earnings growth is likely to be led by Communication Services, Materials and Energy sectors, while Consumer Discretionary, Utilities and Consumer Staples are expected to report earnings declines. Reliance and Bharti should be the biggest contributors to aggregate BSE Sensex earnings, while SBI and Tata Motors (NYSE:TTM) are projected to be the poorest performers.
Margin expansion is expected to remain limited, with only five out of ten sectors likely to see improvements. Energy and Materials sectors are projected to experience margin expansion, whereas Consumer Discretionary margins are expected to fall the most.
Morgan Stanley notes that consensus earnings growth estimates for Sensex have declined by 3% in the past three months to 12%, with the fiscal 2026 consensus EPS now 3 percentage points below their top-down estimate. The firm recommends lenders, select consumer and industrial stocks heading into earnings season.
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