Expert view: Prolonged US-Iran conflict risks earnings estimate cuts, says Dhiraj Relli of HDFC Securities

Dhiraj Relli of HDFC Securities warns that a prolonged US-Iran conflict could trigger earnings estimate cuts, though FY27 earnings growth is expected to exceed FY26. He anticipates H2CY26 to improve on better sentiment, prolonged consolidation, and reasonable valuations, with the street expecting around 15% earnings CAGR in FY27 and FY28. He is overweight on diversified financials, private banks, manufacturing and industrials, defence, pharma, cement, and consumer discretionary, while underweight on consumer staples, noting that FY27 for pharma will be muted due to gRevlimid genericization impacting Dr Reddys, Zydus Lifesciences, Natco, and Cipla.