Q4FY26 Midcap Outlook: Subdued Quarter, Recovery Ahead | Sector Report

We expect our Midcap universe to report a subdued performance, with encouraging trends in January and February offset by a weak March, impacted by geopolitical disruptions and gas availability constraints.  However, we expect a gradual recovery in the coming quarters, supported by completion of ongoing capex and improving utilization levels. Within our coverage universe, we remain constructive on Entero Healthcare Solutions Ltd, Landmark Cars Ltd, Goldiam International Ltd and  Aditya Vision.

Consumer Discretionary (Households & Lifestyle)

These companies provide products or services that are considered "non-essential" but are popular when consumer spending power is healthy.

La Opala:

We expect the company to report a ~7% YoY decline in revenue, led by weak consumer demand and continued disruption in export markets amid geopolitical tensions. Further, gas supply constraints during the quarter impacted production, weighing on volumes and overall performance.

Borosil Limited:

We expect the company to report a muted set of numbers, primarily impacted by a decline in non-glassware sales amid BIS-related disruptions, along with lower gas availability in March weighing on revenues. Margins are also likely to remain subdued during the quarter. However, we expect a gradual recovery in the non-glassware segment, supported by the commissioning of the new steel flask plant from April.

Cello Limited:

We expect the company to deliver ~11% YoY revenue growth for the quarter, driven by the integration of the Cello brand in the writing instruments segment. However, the consumer ware segment is likely to remain subdued due to lower offtake in plasticware, while the moulded furniture segment is also expected to see weak growth. Margins are likely to trend lower, impacted by higher input costs and the integration-related expenses of the Cello brand.

Carysil:

We expect Carysil Ltd. to report ~10.5% YoY revenue growth, driven by steady traction across all verticals, despite the impact of ongoing geopolitical disruptions. With over one-third of revenues coming from exports, overall growth is likely to remain moderate, while margins are expected to remain largely stable during the quarter.

Ethos Limited:

We expect the company to deliver ~23% YoY revenue growth this quarter, driven by healthy SSSG and continued store additions, reflecting strong underlying demand and improving scale. However, profitability is likely to remain muted despite the robust topline, as cross-currency headwinds, upfront store-opening costs (staffing, rentals, pre-operative spends) and accelerated depreciation on new stores are expected to weigh on margins in the near term.

Safari Industries:

We expect the company to report moderate revenue growth of ~8.5% YoY, impacted by weaker travel demand in March amid ongoing geopolitical tensions in the Middle East. This, coupled with elevated raw material costs, is likely to exert pressure on margins. However, the company may undertake price hikes in the near term to partially offset cost pressures.

Landmark Cars:

We expect the company to post ~15% YoY revenue growth, driven by healthy new-car sales and low double-digit growth in after-sales, supported by improving traction in newly added workshops. Margins are likely to expand during the quarter, led by a higher after-sales mix and better performance from new outlets as utilization levels ramp up.

Goldiam International:

We expect the company to report ~14% revenue growth, driven by strong performance in the B2B segment, with lab-grown diamond jewellery sales continuing to remain robust. The B2C segment is likely to see steady traction, with store count scaling up to ~23 by end-March. However, higher costs associated with the B2C expansion could weigh on near-term profitability. Nonetheless, we remain positive on the long-term outlook, supported by a resilient B2B franchise and improving domestic traction for lab-grown jewellery.

Wonderla Holidays:

We expect the company to deliver ~21% YoY growth, driven by the new Chennai park and improved performance in its resort segment, while mature parks are likely to report low single-digit growth. Margins could see a YoY recovery on a favorable base; however, we expect a return to normalized margin levels from FY27 as the new Chennai park scales up.

Aditya Vision Ltd:

We expect the company to deliver ~19.9% revenue growth, driven by strong traction in Bihar markets, supported by early onset of the summer season boosting cooling product sales. Margins are likely to decline to ~8%, primarily due to lower operating leverage amid continued store expansion. During the quarter, the company added ~15 stores, taking the total store count to ~207 by end-FY26E.

Consumer Staples & FMCG

These are companies producing essential goods like food or items used in daily manufacturing.

Mrs Bectors Food:

Mrs Bectors is likely to report a relatively moderate quarter, with domestic demand recovery remaining slower than expected, weighing on overall growth momentum. We estimate revenue growth of ~9.6% YoY, driven primarily by sustained strength in the bread segment. Margin expansion is expected to remain constrained in the near term due to elevated input costs, which are likely to offset the initial benefits from a gradual recovery in exports.  While exports are gradually recovering and should help margins going forward, the impact will be more visible in later quarters. Overall, EBITDA margin is expected to remain flat at 12.2%, while PAT margin may decline to around 6.9% (down 80 bps YoY), increase in depreciation charge.

Mayur Uniquoters:

We expect the company to deliver ~9% revenue growth, supported by strong traction in export OEM (~20% of sales), while the ongoing Middle East crisis is likely to weigh on general exports (~10% of sales). The domestic segment is expected to remain subdued due to weak offtake in the aftermarket and footwear segments. Margins, however, are likely to improve, driven by a favourable mix of higher-margin export OEM sales and the benefit of lower-cost inventory.

Services & Specialized Logistics

Companies providing professional services or distribution networks.

Entero Healthcare:

We expect the company to report ~33% YoY revenue growth, supported by a combination of organic momentum and the continued consolidation benefits of past acquisitions. While the pace of new acquisitions is likely to moderate, earlier deals should continue to aid topline growth and expand the scale of operations. We also expect margins to improve and hover around ~4.2%, which should support better operating cash flow generation.

Ecos Mobility Limited:

Ecos Mobility is expected to post around 21.5% YoY revenue growth, driven by sustained growth across the business segments. However, margins are likely to contract due to higher operating costs seen over the past quarter. With the expanding business activity across India and the rising establishment of Global Capability Centres (GCCs), the company remains well-positioned to sustain its growth momentum in the coming quarters.

Industrial & Diversified

Jubilant Agri & Consumer Products:

We expect the company to deliver ~10.7% YoY revenue growth, led by strong traction in the adhesives segment, which is likely to grow ~20% YoY (contributing ~28% to FY25 revenue).The performance polymers segment (~61% of revenue) is expected to remain under pressure, with a marginal decline of ~1% YoY. Meanwhile, the Agri segment is likely to post healthy growth of ~15% YoY. Margins are expected to remain under pressure due to elevated input costs. However, EBITDA margin is estimated at 8.7%, improving by 190 bps YoY, aided by a low base, while PAT margin is likely to come in at 5.3% (down 129 bps YoY).

Click to download the full MidCap - Consumer Durables Sector Report Q4FY26

Analyst:

• Rahul Dani - Research Analyst, Institutional Equities (NISM-201500034725)
• Vaidik Bafna - Research Associate, Institutional Equities (NISM-202100035711)
• Aachal Pal - Research Associate, Institutional Equities (NISM-202300215737)

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FAQs on Midcap sector report Q4FY26

Why is Q4FY26 subdued for midcap stocks?

Geopolitical disruptions, gas supply constraints, and weak demand in March impacted overall quarterly performance.

Which midcap stocks are preferred?

Entero Healthcare, Landmark Cars, Goldiam International, and Aditya Vision are preferred due to strong growth visibility and execution.

What sectors are facing pressure?

Consumer goods, exports, and travel-related segments are facing pressure due to demand slowdown and geopolitical challenges.

What is the outlook for midcaps?

A gradual recovery is expected, supported by capex completion, improving utilization, and stable demand trends in domestic markets.

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