Nifty Earnings Gain Momentum As Q1 Results Beat Estimates Across Sectors

Corporate earnings gathered pace in the June quarter, with companies across 19 sectors delivering results ahead of expectations, according to Motilal Oswal. The improvement was visible across market-cap segments, although oil marketing companies (OMCs) and a few large companies reduced the overall earnings performance.

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For the broader set of companies tracked by the brokerage, excluding OMCs, sales increased 18% year-on-year, while EBITDA and profit after tax (PAT) rose 15% and 22%, respectively. The corresponding estimates were 15%, 10% and 15%.

Nifty 50 Profit Growth Hits 10-Quarter High

The Nifty 50 recorded an 18% year-on-year increase in PAT during the quarter, marking its strongest growth in 10 quarters. The figure was also well above the 10% growth estimated earlier.

ONGC, Hindalco, Reliance Industries, JSW Steel and Bharti Airtel contributed around 60% of the incremental earnings growth within the index. Financial services, metals, oil and gas, technology and telecom were among the major contributors to the broader earnings performance.

The aggregate numbers were affected by OMCs, which reported a combined loss of ₹181 billion during the quarter against a profit of ₹162 billion in the year-ago period. InterGlobe Aviation, ITC, Dr Reddy’s Laboratories, Tata Motors’ passenger vehicle business and Cipla were also identified as notable drags.

Mid And Small Caps Outperform Expectations

The earnings improvement extended beyond large-cap companies. Large-cap earnings grew 21% year-on-year, compared with the 14% growth expected.

Mid-cap companies reported 23% earnings growth against an estimate of 17%, marking an 11-quarter high. Small-cap earnings increased 31%, ahead of the 22% estimate. Motilal Oswal attributed the small-cap performance partly to a favourable base, along with stronger growth in financials and oil and gas.

The earnings beat ratio also remained positive. About 48% of companies in the tracked universe exceeded profit estimates, while 25% fell short. Among large-cap companies, 57% beat estimates, compared with 39% for mid-caps and 48% for small-caps.

FY27 Nifty Earnings Estimate Raised

The stronger quarterly performance led to modest upward revisions in earnings expectations. Motilal Oswal raised its FY27 Nifty earnings-per-share estimate by 0.6% to ₹1,232. The FY28 estimate was increased by 0.3% to ₹1,425.

The FY27 revisions included upgrades for Reliance Industries, Hindalco, ONGC, ICICI Bank and SBI.
The results also supported a broader earnings recovery across sectors rather than one concentrated only among a few companies. Nifty earnings remained supported by financials, metals, energy, technology and telecom during the quarter.

For investors tracking the Nifty 50 share price, the June quarter results provide the latest earnings backdrop for the index. The individual stocks also saw varied performances, reflecting differences in sectoral growth and company-specific results.

The quarter ended with stronger-than-expected profit growth across large, mid and small-cap companies, while the impact of OMC losses and other weak performers kept the headline improvement from being even stronger. The revised FY27 and FY28 earnings estimates now incorporate the June quarter performance.