Selective Stock Picks to Outperform Amid Earnings Recovery: Mayuresh Joshi
Mayuresh Joshi of Marketsmith India expects market recovery driven by 12-14% earnings growth, with Q3 results crucial for confirming turnaround. His selective picks include Vishal Mega Mart (9.4-9.5% EBITDA margins), Bank of Maharashtra (98% PCR, 14% Tier-I ratio), Shriram Finance, and Uno Minda (content per car doubling potential). Strategy focuses on sector rotation in consumer discretionary, BFSI, and auto ancillaries rather than broad market exposure.
*this image is generated using AI for illustrative purposes only.
After disappointing broader market performance in 2025, market experts are identifying early signs of recovery driven by improving earnings visibility. Mayuresh Joshi, Head Equity at Marketsmith India, believes markets could rebound over the next few quarters as earnings begin to normalise, with selective stock picking becoming crucial for outperformance.
Market Recovery Outlook
Joshi expects the market recovery to be driven by earnings trajectory improvements, with Q3 results serving as a critical indicator. "Q2 has been relatively resilient, and therefore Q3 numbers will be keenly watched. Apparent signs of a turnaround, if seen in Q3 and the second half, would lay the base for 12% to 14% consensus earnings growth, which is being pencilled in by most analysts," he explained.
The expert's sector rotation models are already identifying opportunities in specific market segments, with consumer discretionary, select BFSI names, and infrastructure stocks showing particular promise.
Consumer Discretionary: Vishal Mega Mart
Within the consumer discretionary space, Joshi highlights Vishal Mega Mart as a compelling proxy play. The company's Q2 performance demonstrates strong operational improvements:
| Metric: | Performance |
|---|---|
| EBITDA Margins (H1): | 9.40-9.50% |
| Sales Growth: | ~12% |
| Business Mix: | Apparel and FMCG |
"With consumption expected to come back strongly, especially post GST rationalisation, and given the company's mix across apparel and FMCG, the positioning looks favourable," Joshi noted.
Financial Services Recommendations
Joshi maintains his preference for select lenders, particularly highlighting two key picks:
Shriram Finance remains his preferred NBFC choice, held in both domestic and global portfolios.
Bank of Maharashtra shows strong fundamentals across multiple parameters:
| Parameter: | Current Status |
|---|---|
| Cost-to-Income Ratio: | Declining trend |
| Asset Quality: | Improving quarter-on-quarter |
| Provision Coverage Ratio: | ~98% |
| Tier-I Capital Ratio: | ~14% |
"If the current earnings run rate continues, expectations of better ROAs and ROEs should play out," Joshi explained.
Auto Ancillaries: Uno Minda Focus
In the auto ancillaries segment, Joshi identifies Uno Minda as a preferred pick, driven by structural growth opportunities. The company benefits from multiple tailwinds:
- Integrated facilities with new plant expansion
- EV-agnostic platforms providing flexibility across ICE and EV segments
- Content per car expansion expected to increase significantly
| Current Content per Car: | Future Potential |
|---|---|
| ₹12,000-15,000 | ₹35,000-40,000 over time |
| Target Timeline: | Doubling in 18-24 months |
The EV adoption trends support this thesis, with four-wheeler EV penetration at 5% industry-wide and two-wheeler penetration reaching 9%, with volumes crossing one million units in FY25.
Tyre Sector Opportunities
Joshi sees favorable conditions in the tyre sector, supported by improving auto sales and benign input costs. The sector benefits from both OEM demand and the resilient replacement market, where companies enjoy stronger pricing power and margins.
Key recommendations include:
- JK Tyre: Strong CV exposure with significant replacement market revenue
- Apollo Tyres: International operations expected to perform better, with innovations in EV and green tyres
Both companies show strong ratings on Marketsmith India's evaluation system and are positioned to benefit from the recovering auto ecosystem across passenger vehicles, two-wheelers, and commercial vehicles.
Strategic Approach
The overall investment strategy emphasizes selective sector rotation rather than broad market exposure. Key drivers for the next phase of market performance include earnings recovery, operating leverage benefits, and balance sheet strength. This focused approach aims to capitalize on specific opportunities while the broader market works through its recovery phase.
16
