OMKARA CAPITAL - DAILY NEWSLETTER 17th August 2026

BJP reshuffle likely to be announced today: Republic TV.
Lot of supply waiting to hit markets in the next few days, so be very selective: VB

EARNINGS SEASON ENDS ON A STRONG NOTE

The earnings season has ended on a strong note. According to Motilal Oswal, Nifty-50 PAT growth reached a 10-quarter high of 18% YoY, versus an estimated 10%. SBI’s analysis of 2,257 listed non-BFSI companies shows Q1FY27 net sales, EBITDA and PAT growth of 24%, 9% and 4% YoY, respectively. This is encouraging.

Q1FY27 reinforces the resilience of India’s domestic growth engine. Financials, autos, and the investment and electrification ecosystem are showing the strongest momentum. Consumer demand is healthier than feared, while chemicals are beginning to show early, though uneven, signs of recovery.

MARKET ACTIVITY AND INVESTOR FOCUS

With earnings season behind us, we expect increased activity in fund-raising, block deals, QIPs and IPOs. Several investor conferences are also underway, creating opportunities to identify new ideas. So – nothing to rush as lot of supply side is waiting to come in the markets in next few days.

MACRO INDICATORS REMAIN SUPPORTIVE

The macro backdrop remains positive. India’s Q1 GDP growth is expected at around 8%. Credit demand continues to expand, rising 19.3% for the fortnight ended 31 July 2026. Deposit growth has also accelerated to 15.4%, supported by strong FCNR inflows.

As of 13 August, USD 52.3 billion has been mobilised under FCNR(B), which is remarkable. Even after the one-month truncation, we expect total FCNR(B) mobilisation to reach USD 65-70 billion by the end of the scheme. Including OFCBs and ECBs, total mobilisation could reach USD 80-85 billion.

FLOWS, MONSOON AND PORTFOLIO REVIEW

There is a visible reversal in FII flows, moving from earlier outflows towards inflows following measures announced by the RBI and the Government. Domestic demand and corporate performance remain supportive.

The monsoon situation has also improved, with the nationwide deficit narrowing to around 13%. Encouragingly, kharif sowing is only 2% below last year, indicating better irrigation coverage.

We are reviewing all our recommendations after the earnings season and conference calls, and will make changes where needed. As always, we will advise moving out of companies that are not performing and have tested our patience for some time, and look to replace them with new ideas.

EARNINGS SNAPSHOT

Bharat Dynamics was the standout result, with revenue up 131%, EBITDA turning positive and PAT up 547%, led by Akash and ATGM execution against a Rs 26,000 crore backlog. Belrise delivered a stable quarter, with gross margins protected through raw-material pass-through, while aerospace and defence remain a longer-term optionality. Voltas saw strong RAC volume and share gains, but lower EMP execution and Street EBITDA miss made it a mixed quarter.

🟢 GREEN | STRONG EARNINGS

1. BHARAT DYNAMICS: Strong beat as Akash and ATGM execution drives a sharp recovery

M-cap: Rs 51,245 crore | CMP: Rs 1,398 | 52-week range: Rs 1,086-1,655 | P/E: 98.4x

Bharat Dynamics reported a strong beat, with revenue rising 131% YoY and 19% QoQ to Rs 572 crore. EBITDA turned positive to Rs 83 crore from a loss of Rs 45 crore in Q1FY26, with margin at 14.5%, up 300 bps QoQ. PAT rose 547% YoY to Rs 119 crore. The YoY base was a loss-making quarter, making QoQ the more relevant lens. Execution was led by the resumption of Akash and ATGM programmes against a Rs 26,000 crore order backlog, equivalent to 10.6x FY26 sales.

Guidance: Management retained FY27 order-inflow target of Rs 15,000 crore, revenue guidance of more than Rs 5,000 crore and EBITDA-margin guidance of 12-15%.

Capex and backlog: Two new facilities are being commissioned in FY27: Ibrahimpatnam, with eight assembly lines and testing capability, and Jhansi, for propellants, guided rockets and energetics R&D. No capex quantum was disclosed. The backlog consists of surface-to-air missiles at around 50% and ATGMs at around 40%.

PPT: Gross margin declined to 52% from 76% YoY due to a higher missile-system mix, not structural deterioration. Inventory of Rs 4,630 crore, or 621 days, is now being billed out and is an underappreciated tailwind.

🟡 AMBER | IN-LINE EARNINGS

2. BELRISE INDUSTRIES: Stable core quarter; all eyes on merger, 4W/non-auto pivot and aerospace optionality

Belrise reported revenue growth of 13% YoY, with 16-22% growth across two-wheelers, passenger vehicles and commercial vehicles. EBITDA margin improved 20 bps QoQ but declined 90 bps YoY despite higher commodity prices. The company secured multiple new orders across two-wheelers and four-wheelers, and is expanding its non-auto footprint with a new renewable-energy order. Concall is at 11 a.m. on 17 August.

Margin drivers: Gross margin was stable at 20%, as raw-material inflation was passed through. However, the first-time consolidation of Chester Hall, a UK aerospace business, along with domestic labour, energy and logistics costs, kept operating EBITDA margin at 11.5%, down 88 bps YoY. Lower finance cost, down 42% YoY, supported PAT growth of 9% YoY. The 88-bps EBITDA contraction was an opex issue rather than a raw-material issue: employee cost rose 42% YoY to 4.5% of revenue from 3.6%, while other opex rose 32% to 4% of revenue from 3.4%. Manufacturing EBITDA margin was 12.7%, down 110 bps YoY, with lower-margin trading pulling consolidated margin below this level.

Aerospace and defence optionality: Chester Hall is profitable, SDM France is ramping up and the Plasan Sasa defence alliance is progressing. The company is empanelled with the world’s largest aircraft OEM and leading French engine and combat OEMs. Aerospace and defence is targeted to contribute more than 10% of revenue over the long term—a margin drag today but a growth vertical tomorrow.

Valuation and view: At CMP of around Rs 255, Belrise trades at around 34x FY27E and 27x FY28E EPS. We remain positive: the Tier-0.5 shift, 4W/CV inflection, capital-light aerospace and defence optionality, stable gross margin in a difficult cost environment, deleveraged balance sheet, Rs 1,700 crore war chest and around 24% share of India’s two-wheeler metal-components market keep the compounding runway wide.

3. AURUM PROPTECH: Third consecutive profitable quarter; Housing.com adds scale but near-term burn

M-cap: Rs 1,589 crore | CMP: Rs 220 | 52-week range: Rs 151-265 | P/E: 246x

Aurum reported its third consecutive profitable quarter, with adjusted income rising 57% YoY to Rs 118 crore from Rs 73 crore in Q1FY26. Adjusted EBITDA margin expanded 1,320 bps YoY to 10.2%, while PBT turned positive at Rs 2 crore versus a Rs 11 crore loss.

The all-equity acquisition of Housing.com, which had FY25 revenue of Rs 301 crore and 58 million monthly traffic, adds scale but brings an annualised burn of around Rs 200 crore.

Guidance and concall: No formal numerical guidance was provided. Management targets Housing.com profitability in 4-6 quarters, with an internal target of 3-4 quarters, and consolidated profitability 2-3 quarters after closure. It also expects Rs 1,000 crore ARR to be reached and surpassed faster than the earlier trajectory. Housing.com was acquired at around 1.5x revenue, versus 4.5-10x marketplace comparables, and adds 58 million monthly visits and 12 million MAUs. Annualised burn is around Rs 200 crore, with FY25 spend of Rs 531 crore versus revenue of Rs 343 crore. Distribution recovery from PropTiger slab resets is expected to be H2-weighted; leads sold grew 77% YoY and active licences increased 41% YoY.

4. VOLTAS: RAC outperformance offsets EMP weakness; margins improve sequentially but EBITDA misses Street

M-cap: Rs 43,693 crore | CMP: Rs 1,320 | 52-week range: Rs 1,187-1,582 | P/E: 102x

Voltas reported a mixed quarter. Revenue grew 19% YoY to Rs 4,670 crore, around 10% below Kotak estimates. EBITDA increased 49% YoY, with margin improving 120 bps QoQ to 5.7%, though EBITDA missed Street estimates by around 11%, according to Nuvama. Unitary Cooling Products was strong, with RAC volumes up 45% YoY and market share at 17.3%, while EMP revenue declined 27% YoY.

Guidance: UCP EBIT margin is expected to improve QoQ and YoY over the next around eight quarters, although no specific range was given. No further price hikes are planned unless costs worsen. Voltas Beko breakeven has slipped a few quarters beyond FY27; no formal consolidated-margin guidance was provided.

Capex and concall: Atomberg’s 50:50 JV capex for compressor capacity of around 2.8 million RAC units will be incurred in FY28-FY29, with quantum under finalisation. Existing Pantnagar capacity is around 1.4 million units and Chennai capacity is around 1.2 million units. RAC industry primary volume grew 20-22%, while Voltas grew around 44-45%, taking secondary market share to 17.3% from 15.9% in FY26 and 4 percentage points ahead of the nearest rival. EMP order book is around Rs 6,300 crore, but international new orders have been delayed by the West Asia conflict. Segment B material EBIT recovery is expected only in Q3-Q4, while channel inventory is around four weeks.

Warm regards,
Omkara Capital Private Limited
www.omkaracapital.in

Disclaimer: This newsletter is for informational purposes only and should not be construed as investment advice. Please consult your financial advisor before making any investment decisions.