Strong June-quarter earnings, festive demand and GST-led consumption support point to sustained corporate profit growth
Corporate India delivered a stronger-than-expected performance in the June quarter, with profit growth among Nifty 50 companies averaging 18 per cent year-on-year, the highest pace in 10 quarters, according to analysis by five brokerages.
The earnings performance has strengthened expectations of sustained corporate profit growth through fiscal 2027, despite pressure on margins from higher input, freight and wage costs.
Motilal Oswal described the June quarter as “picture perfect”, with profit and revenue growth remaining robust across large-, mid- and small-cap companies. Oil marketing companies were the notable exception, hit by elevated crude prices and uncertainty stemming from the Middle East.
According to Motilal Oswal, 19 sectors exceeded earnings estimates during the quarter, while the upgrade-to-downgrade ratio improved to 1.5. This means analysts upgraded earnings estimates for roughly 15 companies for every 10 that were downgraded, signalling a broader improvement in the earnings outlook.
What is driving the FY27 outlook?
Brokerages expect festive demand, GST-related consumption support, expanding credit and stronger investment activity to provide key support to corporate earnings in FY27.
Large-cap companies including Hindalco, Reliance Industries, JSW Steel, ONGC and Bharti Airtel were among the key Nifty 50 companies that beat earnings expectations, analysts said.
More from BusinessBanks also benefited from faster loan growth, lower credit costs and operating leverage, according to Jefferies. Non-bank lenders recorded strong growth in assets under management while maintaining broadly stable asset quality.
Metals companies benefited from improved pricing, while retail, jewellery, paints, selected internet companies and consumer staples continued to see resilient demand. Analysts also pointed to premiumisation and price-led growth as additional drivers in several consumer-facing sectors.
Margin pressure remains a concern
The improving earnings outlook, however, is not without risks. Brokerages flagged pressure on margins from higher prices of metals, crude derivatives, palm oil and freight, alongside rising wage costs.
Autos, consumer goods and logistics companies were among the sectors facing pressure from elevated input costs.
Oil marketing companies remained the biggest weak spot after several reported sharp losses in the first quarter. Higher crude prices outweighed strong refining margins, leaving earnings vulnerable to fuel-price pass-through, inventory movements and further volatility in crude prices.
Overall, the June-quarter earnings season has given analysts greater confidence in India’s FY27 corporate profit outlook, with consumption, credit growth and investment activity expected to remain the key pillars of earnings expansion.
