SBI Securities bullish on banks, NBFCS, defence; Shriram, Baja Fin, L&T, BEL are top picks
SBI Securities' Sunny Agrawal sees a strong Q1FY27 earnings recovery and favours banks, NBFCs, defence, power and engineering stocks. Check his top picks.
- Aug 16, 2026,
- Updated Aug 16, 2026 11:07 AM IST
India Inc’s first-quarter earnings season has been significantly better than expected, with a broad-based revival in corporate earnings despite concerns over geopolitical tensions, higher crude oil prices, supply-chain disruptions and global trade uncertainty, Sunny Agrawal, Head of Fundamental Research at SBI Securities, said.
Agrawal said median sales, EBITDA and profit after tax growth for BSE 500 and BSE 1000 companies came in at 17-22 per cent, making Q1FY27 one of the strongest quarters in the past eight quarters. He said the market had been grappling with single-digit earnings growth for the last seven to eight quarters, but now expects Indian companies to post double-digit earnings growth in FY27, with mid- and small-caps likely to do better.
Recovery broadens across sectors Agrawal said the earnings outlook for FY27 and FY28 remains well placed, with several sectors showing signs of a meaningful recovery. He identified cables and wires as among the strongest-performing segments in the quarter, while structural steel tube companies also retained a robust outlook despite some challenges.
Banking and NBFCs in focus Agrawal said banking and non-banking financial companies are among the sectors best placed over the next three to six months in terms of both earnings and stock-market performance. While private banks reported a mixed set of numbers, their balance sheets continued to expand at double-digit rates. Core income growth, measured by net interest income, remained slower at about 7-8 per cent, but he expects NII and core operating profit growth to catch up as net interest margins stabilise.
“We believe banking and NBFC, the entire pack, is likely to do well over the period of next three to six months,” Agrawal said. Within NBFCs, he expects credit growth to remain healthy through the rest of FY27, with most companies guiding for 15-25 per cent growth in advances, depending on size and business profile.
Agrawal recommended a buy-on-dip approach in select NBFCs, including Shriram Finance and Bajaj Finance. He said the infusion of funds from a Japanese conglomerate into Shriram Finance could reduce borrowing costs and support net interest margin expansion.
He said Bajaj Finance has reported strong numbers and any weakness in the stock could be used as a buying opportunity. He also highlighted Mahindra & Mahindra Financial Services and Northern Arc among smaller NBFCs recommended by SBI Securities.
Defence, capital goods and power themes Agrawal said defence companies should continue to deliver strong earnings, particularly within the wider capital goods, engineering and order book-driven space. Bharat Electronics remains one of SBI Securities’ preferred picks despite some profit booking after its quarterly performance, while Larsen & Toubro continues to see robust order inflows across businesses despite challenges in the Middle East.
In the power and power-ancillary segment, Agrawal favours Siemens Energy, which underperformed in the previous quarter. He said its latest numbers were broadly in line with expectations and the stock could do better going ahead. He also highlighted Cummins India, where margin pressure weighed on profitability despite around 18 per cent top-line growth. Agrawal expects margins to recover after the company’s pricing actions. SBI Securities has a target price of Rs 6,500 on the stock.
Overall, Agrawal said the Q1FY27 earnings recovery marks a shift from a prolonged period of subdued growth, with banking, NBFCs, defence, engineering and power-linked companies offering opportunities over the next six to 18 months.
India Inc’s first-quarter earnings season has been significantly better than expected, with a broad-based revival in corporate earnings despite concerns over geopolitical tensions, higher crude oil prices, supply-chain disruptions and global trade uncertainty, Sunny Agrawal, Head of Fundamental Research at SBI Securities, said.
Agrawal said median sales, EBITDA and profit after tax growth for BSE 500 and BSE 1000 companies came in at 17-22 per cent, making Q1FY27 one of the strongest quarters in the past eight quarters. He said the market had been grappling with single-digit earnings growth for the last seven to eight quarters, but now expects Indian companies to post double-digit earnings growth in FY27, with mid- and small-caps likely to do better.
Recovery broadens across sectors Agrawal said the earnings outlook for FY27 and FY28 remains well placed, with several sectors showing signs of a meaningful recovery. He identified cables and wires as among the strongest-performing segments in the quarter, while structural steel tube companies also retained a robust outlook despite some challenges.
Banking and NBFCs in focus Agrawal said banking and non-banking financial companies are among the sectors best placed over the next three to six months in terms of both earnings and stock-market performance. While private banks reported a mixed set of numbers, their balance sheets continued to expand at double-digit rates. Core income growth, measured by net interest income, remained slower at about 7-8 per cent, but he expects NII and core operating profit growth to catch up as net interest margins stabilise.
“We believe banking and NBFC, the entire pack, is likely to do well over the period of next three to six months,” Agrawal said. Within NBFCs, he expects credit growth to remain healthy through the rest of FY27, with most companies guiding for 15-25 per cent growth in advances, depending on size and business profile.
Agrawal recommended a buy-on-dip approach in select NBFCs, including Shriram Finance and Bajaj Finance. He said the infusion of funds from a Japanese conglomerate into Shriram Finance could reduce borrowing costs and support net interest margin expansion.
He said Bajaj Finance has reported strong numbers and any weakness in the stock could be used as a buying opportunity. He also highlighted Mahindra & Mahindra Financial Services and Northern Arc among smaller NBFCs recommended by SBI Securities.
Defence, capital goods and power themes Agrawal said defence companies should continue to deliver strong earnings, particularly within the wider capital goods, engineering and order book-driven space. Bharat Electronics remains one of SBI Securities’ preferred picks despite some profit booking after its quarterly performance, while Larsen & Toubro continues to see robust order inflows across businesses despite challenges in the Middle East.
In the power and power-ancillary segment, Agrawal favours Siemens Energy, which underperformed in the previous quarter. He said its latest numbers were broadly in line with expectations and the stock could do better going ahead. He also highlighted Cummins India, where margin pressure weighed on profitability despite around 18 per cent top-line growth. Agrawal expects margins to recover after the company’s pricing actions. SBI Securities has a target price of Rs 6,500 on the stock.
Overall, Agrawal said the Q1FY27 earnings recovery marks a shift from a prolonged period of subdued growth, with banking, NBFCs, defence, engineering and power-linked companies offering opportunities over the next six to 18 months.