Manufacturing-Led Growth Pushes Nifty 500 Earnings Up 16% In March Quarter

Manufacturing and investment-driven sectors powered a broad-based earnings expansion in the March quarter of FY26, with aggregate profits of Nifty 500 companies rising 16% year-on-year, according to a report by Axis Mutual Fund. Revenue growth also strengthened, reaching its highest level in 13 quarters.

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The report showed that earnings excluding financial companies increased 17% during the quarter. Excluding commodity-linked sectors such as metals and oil and gas, profit growth was still 12% pointing to the broad-based nature of the recovery, rather than a few pockets.

Manufacturing And Investment Sectors Drive Earnings

Segments associated with investments constituted major factors contributing to profitability increases. Companies dealing with automobiles achieved 23% profits growth compared to the previous year, whereas infrastructure-related companies witnessed 15% growth in profits. Companies with capital goods experienced 8% profitability increase.

Also, consumer-oriented segments gave impressive results. In real estate business, earnings grew by 20%, whereas retail firms recorded 45% increase in profits. According to the Axis Mutual Fund, growth in revenues for the Nifty 500 companies came to 12% year-over-year, which is the highest growth in more than three years.

Economic Activity Supports Corporate Performance

The earnings momentum coincided with robust economic growth. India’s real GDP expanded 7.7% in FY26, with the March quarter registering growth of 7.8%.

Gross fixed capital formation grew 10.8% during the quarter, emerging as the largest contributor on the demand side. The report said this points to strengthening investment activity and a more balanced growth pattern across consumption, services, manufacturing and capital expenditure.

Manufacturing continued to gain importance within this mix. Sales growth in the sector accelerated to 14.5% in the March quarter from 11.4% in the preceding quarter, supported by demand in automobiles, electrical machinery and metals.

Separate data compiled by the Reserve Bank of India covering 3,266 listed companies showed aggregate sales growth of 13.9% year-on-year in the March quarter, with momentum improving across sectors.

Midcaps Outpace Broader Market

Mid-sized companies emerged as a major contributor to the earnings upcycle. Aggregate profits of the Nifty Midcap 150 rose 34% year-on-year, outpacing both large-cap and small-cap peers.

Nearly half of the companies in the Nifty 500 reported profit growth exceeding 15%, while 14 out of 23 major sectors posted double-digit earnings growth. According to the report, the wider participation suggests that the current earnings cycle is becoming more diversified.

Axis Mutual Fund said earnings growth could moderate in FY27 because of higher base effects and an uncertain global environment. However, underlying drivers such as consumption, manufacturing, investment and services remain supportive of corporate growth over the medium term.