Ambit revamps model portfolio: Adds Axis Bank, L&T, Ather Energy; drops Tata Motors, Coal India

Ambit Capital has reshuffled its model portfolio in its June 2026 strategy report, adding Axis Bank, Larsen & Toubro, UltraTech Cement and Ather Energy while removing Coal India, Shriram Finance, HDFC Life Insurance Company, and Tata Motors CV. The brokerage house remained cautious on the broader market and doubled down on large-cap heavyweights, defensives and a few tactical bets.

Ambit Capital said the portfolio remained positioned for a market where leadership narrows and macro risks rise. “We do not see meaningful gains in CY26 from current levels,” Ambit said, adding that “West Asia volatility, AI uncertainty, growth concerns and persistent FII outflows have capped the rebound, although strong domestic flows could keep markets near current levels despite elevated volatility.”

Four stocks out, four stocks in

Ambit said it had excluded four stocks from the model portfolio: Coal India, Shriram Finance, HDFC Life and Tata Motors CV. In their place, it added Axis Bank, L&T, UltraTech Cement and Ather Energy.

“What goes out? We exclude four stocks from our model portfolio – Coal India, Shriram Finance, HDFC Life and Tata Motors CV,” Ambit said in the report. “What comes in? There are four additions to the portfolio: Axis Bank, L&T, UltraTech Cement and Ather Energy. These, along with 22 existing stocks, comprise our model portfolio.”

The rejig leaves Ambit with a 26-stock portfolio. Allocation to large-caps stood at 76%, while mid-cap and small-cap allocations stood at 19% and 5%, respectively. Cash allocation stood at 0.2%. Because the portfolio includes mid-caps and small-caps, Ambit said it continued to use the NSE500 as its benchmark.

Portfolio has underperformed since March

Ambit acknowledged that the model portfolio has lagged the benchmark since the last iteration. It said the portfolio had delivered a return of -0.3%, while alpha versus the NSE500 stood at -5.0% since 12 March 2026.

Among the gainers in the portfolio since 12 March were Trent with 36% absolute price performance and 1.5% contribution to portfolio performance, PB Fintech Ltd. with 12% price performance and 0.5% contribution, Fortis Healthcare with 12% and 0.4%, ICICI Bank Ltd. with 6% and 0.4%, and Bharti Airtel with 6% and 0.3%.

Other positive contributors included Max Healthcare Institute with 7% price performance and 0.3% contribution, Marico with 8% and 0.3%, HealthCare Global Enterprises with 9% and 0.2%, Tech Mahindra with 4% and 0.1%, and Mahindra & Mahindra with 1% and 0.1%. Sun Pharmaceutical Industries rose 1% but had a negligible contribution, while Max Financial Services fell 2% with no meaningful impact on portfolio performance.

On the losing side, Shriram Finance fell 3% and shaved 0.1% off performance, ITC fell 4% and contributed -0.2%, Coal India fell 4% and contributed -0.2%, State Bank of India fell 5% and contributed -0.2%, and Godrej Consumer Products fell 5% and contributed -0.2%.

Reliance Industries fell 6% and contributed -0.2%, Indus Towers fell 7% and contributed -0.3%, HDFC Life Insurance fell 8% and contributed -0.3%, Tata Consultancy Services fell 13% and contributed -0.3%, HDFC Bank fell 6% and contributed -0.4%, Tata Motors fell 9% and contributed -0.4%, Britannia Industries fell 10% and contributed -0.4%, Infosys fell 17% and contributed -0.5%, and HCL Technologies fell 17% and contributed -0.6%.

Ambit said the drag was largely linked to IT. In the report’s summary, it said, “Our portfolio has underperformed the index by 5% since the last iteration, as the IT sector has underperformed significantly.”

Why Ambit added Axis Bank

The clearest tactical call in the reshuffle was on banks. Ambit said it had increased allocation to banks in the near term as the market began pricing in policy-tightening risk.

“We increase our allocation to banks in the near term, with the sector expected to benefit from the risk of policy tightening currently priced by the swap market,” Ambit said. “We continue to prefer heavyweight banks, with model portfolio allocations in HDFC Bank, ICICI Bank and SBI. This remains consistent with our market concentration framework. We add Axis Bank to express the tactical overweight call for the next quarter and remove Shriram Finance.”

The brokerage argued that in an environment of rising inflationary pressure, a weaker rupee, a higher-for-longer Fed stance and sharp OIS repricing, banks are better positioned than NBFCs. It said private banks are particularly better placed than PSU banks because of their higher share of EBLR-linked loans and faster asset-side repricing.

Ambit highlighted that Axis Bank and Kotak Mahindra Bank led on EBLR-linked loans, with 63% and 62% of outstanding loans linked to EBLR, followed by ICICI Bank at 53%, IndusInd Bank at 48%, HDFC Bank at 45%, SBI at 43% and Bank of Baroda at 35%.

It also said bank NIMs had moderated, with private bank NIMs at 3.7% and PSU bank NIMs at 2.5%, while NBFCs had benefited from the 125bps rate-cut cycle over February-December 2025, with median NIM rising to 8.5%. That tailwind, Ambit argued, could reverse if rates rise again, especially for auto NBFCs with large fixed-rate books.

In Ambit’s words, “banks remain the clearest tactical overweight relative to NBFCs, as higher-rate risk should support EBLR-linked lenders while pressuring fixed-rate NBFC books.”

UltraTech Cement added as a tactical bet

UltraTech Cement was added as Ambit tried to position for a tactical rebound in cement, although the brokerage made clear that this was not a clean structural call.

“The recent spike in crude prices after the West Asia conflict has filtered through to key cement fuel inputs, with both landed petcoke and Indonesian coal prices rising after a prolonged period of stability,” Ambit said. It added that “cement stocks have underperformed since the start of the war as the possibility of spread compression weighed on profitability. A recovery is now contingent on either moderating fuel costs or higher realizations.”

Ambit noted that fuel costs had climbed to around 20% of net cement price, versus 15-17% over 2023-25. It also flagged that the cost of cement bags as a share of net cement price had risen from 3% to 5%, while polypropylene prices had spiked, creating a packaging cost headwind.

Still, the brokerage saw room for a tactical recovery if input costs cool. “Even a modest moderation in energy prices following a US-Iran agreement could help restore spreads and end the sector’s relative underperformance versus the market. This supports a tactical long in cement, but the call remains contingent on relief in input costs. We add UltraTech Cement to the model portfolio, our cement analyst’s preferred pick among large-caps,” Ambit said.

Ather Energy brought in for EV theme

The structural addition in the portfolio was Ather Energy, which Ambit used to express its electric vehicle thesis more directly.

The brokerage said the current macro backdrop made traditional auto exposure less attractive. “Auto OEMs with higher exposure to rural, low-ticket, and ICE-heavy segments remain the most vulnerable,” Ambit said. “El Niño can weaken farm income, food inflation can pressure household budgets, and elevated crude prices raise the running cost of ICE ownership. The relative beneficiary is therefore not the entire auto sector, but EV linked OEMs and suppliers where payback economics are improving. We add Ather to the portfolio to express this structural EV adoption theme.”

That addition also fits Ambit’s broader view that higher fuel prices could accelerate EV adoption even if the near-term environment remains difficult for parts of the auto sector tied to internal combustion vehicles and rural demand.

L&T fits Ambit’s heavyweights and liquidity bias

L&T was the fourth addition to the portfolio and, while Ambit did not spell out a separate long thesis for the stock in the model portfolio section, the move is consistent with its broader call to stick with large-cap heavyweights and liquid names in a slowing, more concentrated market.

Ambit said the “portfolio implication is clear” in a slowdown phase marked by external pressure, rising rate risk and vulnerable FY27 earnings expectations: “market leadership should narrow. We therefore remain positioned toward large-cap heavyweights and liquid names.”

That is also central to the brokerage’s market concentration thesis. Ambit said that over periods of rising concentration, large-caps gain index weight at the expense of mid-caps and small-caps, but even within large-caps the benefit is highly concentrated. “The real protection sits in index heavyweights,” it said.

The model portfolio after the reshuffle

After the June reshuffle, Ambit’s model portfolio comprised 19 large-caps, five mid-caps and two small-caps.

The large-cap basket included Reliance Industries, HDFC Bank, Bharti Airtel, ICICI Bank, State Bank of India, Tata Consultancy Services, Larsen & Toubro, Sun Pharmaceutical Industries, Infosys, Axis Bank, Mahindra & Mahindra, ITC, UltraTech Cement, HCL Technologies, Trent, Tech Mahindra, Britannia Industries, Max Healthcare Institute and Godrej Consumer Products.

The mid-cap names were Indus Towers, Marico, PB Fintech, Fortis Healthcare and Max Financial Services.

The small-cap basket consisted of Ather Energy and HealthCare Global Enterprises.

Ambit stayed ‘Overweight’ on defensives

The bigger message from the reshuffle is that Ambit did not change its core playbook. It continued to back defensives and heavyweights even after a period of underperformance.

“Overall, we remain overweight on defensives (FMCG, Healthcare, Telecom, and IT), in line with our thesis of rising market concentration,” Ambit said. It added that although IT and FMCG had underperformed the benchmark so far in the current cycle of rising market concentration, “this is not the first instance of the cycle, and they catch up in 2H of the cycle.”

The brokerage said the model portfolio remained overweight on autos as a structural EV adoption play and equal weight on banks because of the tactical policy-tightening call. At the same time, it remained cautious on SMIDs, saying elevated valuations and macro uncertainty leave “little margin for error.”

Ambit’s overall market view remained cautious

The portfolio changes came against the backdrop of a cautious house view on the market. Ambit said it did not expect meaningful gains in calendar 2026 from current levels and saw 22,500, roughly 10% below the 200-day moving average, as strong support for the Nifty. It said the Nifty was then trading about 4% below its 200DMA of 24,900.

The report also flagged several macro headwinds: elevated oil prices after the West Asia conflict, AI-related uncertainty, slowing growth, and continued foreign outflows. Ambit argued that slowdown phases have historically implied 3% Nifty EPS growth and 16x trailing P/E, versus consensus FY27 EPS growth of 15% and a current market multiple of 20x trailing P/E. “We expect EPS downgrades,” it said.

Against that backdrop, Ambit’s portfolio response was to stay with what it sees as relatively safer pockets of the market while making only selective tactical shifts.

The takeaway

Ambit’s latest model portfolio rejig is less about turning bullish and more about tightening the way it wants to express caution. Ambit said it remained overweight on defensives such as FMCG, pharma, telecom and IT, while overweight autos and equal weight banks reflected “the structural theme of EV adoption and the tactical call on policy tightening, respectively.” Axis Bank replaced Shriram Finance as Ambit leaned toward banks over NBFCs. L&T strengthens the portfolio’s tilt towards large, liquid heavyweight stocks.