How Are Private And PSU Banks Impacted By MOFSL’s Earnings Revisions?

Why Is MOFSL Cautiously Optimistic On Indian Banks Despite Earnings Cuts?

Motilal Oswal Financial Services (MOFSL) has published a detailed analysis of the banking sector, highlighting sharp earnings downgrades in recent months. While margin pressure, weak loan growth, and rising credit costs have dampened near-term sentiment, MOFSL remains optimistic on medium-term growth, projecting a 17% EPS CAGR over FY26-28.

What’s Driving The Earnings Downgrades?

Consensus earnings estimates for the BFSI sector have been revised sharply lower. Private banks saw cuts of 5%-14% for FY26 and 1%-6% for FY27, while PSU banks experienced milder revisions for the same periods.

The steepest impact has been felt by mid-sized private banks with high exposure to the microfinance sector. Bandhan Bank, Equitas, IDFC First Bank, and RBL Bank witnessed a dramatic 41%-95% collapse in consensus earnings estimates, underlining sectoral vulnerabilities.

Which Banks Are Showing Resilience?

Large, diversified lenders such as ICICI Bank, HDFC Bank, and State Bank of India have demonstrated relative earnings resilience, with only modest downgrades compared to their smaller peers.

This divergence reflects stronger balance sheets, better liability franchises, and diversified loan books, allowing these banks to withstand sector-wide pressures more effectively.

What Is MOFSL’s Outlook?

Despite current challenges, MOFSL expects earnings to recover meaningfully over the medium term, forecasting 17% EPS CAGR across banks between FY26 and FY28.

The brokerage believes that margin stabilization, normalization of credit costs, and improved loan growth will drive the rebound. Investors may need to brace for near-term volatility but should not ignore the longer-term growth prospects of well-capitalized banks.

For traders looking to stay aligned with fast-moving market opportunities, check our live trading insights — 👉 Nifty Tip | BankNifty Tip

Investor Takeaway

Earnings downgrades in the banking sector highlight short-term stress, particularly for mid-sized private banks with microfinance exposure. However, large lenders remain resilient, and MOFSL projects a strong 17% EPS CAGR recovery over FY26-28. Long-term investors may consider staying invested in fundamentally strong banks.

📌 Read more expert guidance at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.

---

SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.

Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services

tags: MOFSL on Banks, Indian Banking Sector, Earnings Downgrades, BFSI EPS Outlook, Private Banks vs PSU Banks, MOFSL EPS CAGR FY26-28