India Inc.'s Q1 FY27 earnings beat expectations; BFSI and metals lead growth
India Inc.'s June quarter (Q1 FY27) earnings have exceeded expectations despite losses in oil marketing companies (OMCs), with banking & financial services (BFSI), metals, technology and automobiles driving corporate profitability, a report said on Thursday.
The report from brokerage firm Motilal Oswal Financial Services' Ltd (MOFSL) said that earnings grew 17 per cent year-on-year, excluding OMCs, highlighting “the underlying strength in corporate earnings despite pressure from elevated crude oil prices.”
After analysing companies that account for around 70 per cent of the estimated profits in all major sectors, the report said overall earnings grew 2 per cent year-on-year, significantly outperforming expectations of a 10 per cent decline.
The earnings growth was led by banking & financial services (20 per cent), metals (53 per cent), technology (11 per cent) and automobiles (7 per cent).
Among the 39 Nifty companies that have reported so far, earnings grew 11 per cent year-on-year, higher than expectations of 7 per cent. Nearly 49 per cent of companies exceeded profit estimates of the brokerage, the report said. Only 22 per cent companies missed expectations, reflecting the broad strength of the earnings season.
The biggest drags on earnings were oil market companies, cement, aviation and healthcare, reflecting the impact of elevated crude oil prices and weakness in select sectors.
Large-cap companies posted 6 per cent earnings growth. Mid-cap earnings declined 31 per cent, primarily due to losses in the OMC segment.
However, excluding OMCs, mid-cap earnings grew 25 per cent year-on-year. Small-cap companies emerged as the strongest performers, reporting 32 per cent earnings growth, supported by financials and a favourable base effect.
The report noted that the Q1FY27 earnings saw the pace of earnings downgrades moderating, but cautioned that geopolitical uncertainties, elevated energy prices and a robust pipeline of IPOs and capital-raising activity could keep markets volatile in the coming quarters.
