Nifty 50 Profit Growth Hits 10-Quarter High at 18% in Q1FY27, Motilal Oswal Financial Services Report
India Inc. has started FY27 on a strong note. Nifty 50 companies reported 18% YoY growth in profit after tax (PAT) in Q1FY27, the highest growth in 10 quarters and well ahead of the 10% growth estimated by Motilal Oswal Financial Services. The strength was broad-based, with 19 sectors exceeding expectations and the earnings upgrade-to-downgrade ratio turning positive at 1.5x, according to the latest India Strategy report by Motilal Oswal Financial Services Ltd.
The key contributors to Nifty 50 earnings growth included ONGC, Hindalco, Reliance Industries, JSW Steel and Bharti Airtel. These five companies together accounted for 60% of the increase in earnings.
The positive trend was visible well beyond the Nifty 50. Excluding oil marketing companies (OMCs), the companies covered by Motilal Oswal Financial Services recorded 18% growth in sales, 15% growth in EBITDA and 22% growth in PAT, beating estimates across all three measures. Financials, metals, oil & gas excluding OMCs, technology and telecom were among the key growth drivers.
Mid- and small-cap companies also delivered a strong quarter. Large-cap earnings grew 21% YoY, while mid-cap earnings rose 23%, marking an 11-quarter high. Small-cap earnings grew an even stronger 31%, well ahead of the 22% estimate, led mainly by financials and oil & gas.
The number of companies beating expectations adds further strength to the picture. 48% of companies in the Motilal Oswal Financial Services coverage universe exceeded PAT estimates, while 25% reported a miss. Among large-cap companies, 57% exceeded estimates.
The earnings outlook is also improving. A total of 130 companies saw earnings upgrades of more than 3%, compared with 89 companies that saw downgrades of more than 3%, resulting in a 1.5x upgrade-to-downgrade ratio.
This improvement has also led to a modest upward revision in Nifty 50 earnings expectations. The FY27 Nifty EPS estimate has been raised by 0.6% to Rs 1,232, while the FY28 estimate has been raised by 0.3% to Rs 1,425 from Rs 1,422.
Financials, metals and oil & gas excluding OMCs were among the strongest contributors to the quarter. Automobiles, chemicals, textiles and real estate also recorded strong earnings growth. OMCs, however, remained a drag on overall earnings, with elevated crude oil prices weighing on their performance.
Overall, Q1FY27 was marked by stronger-than-expected earnings across the market, with the Nifty 50 recording its highest profit growth in 10 quarters and large-, mid- and small-cap companies all delivering positive earnings growth.
Above views are of the author and not of the website kindly read disclaimer
