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PL Capital’s sector-wise earnings previews for the July–September 2026 quarter (Q2FY27) indicate varied performance across industries, with demand momentum, order execution and sector-specific growth drivers supporting business activity in several segments. However, elevated input costs, margin pressures, changing demand conditions and external uncertainties are expected to influence earnings performance across sectors.

The outlook across financial services remains mixed. Asset management companies are expected to benefit from healthy growth in equity quarterly average assets under management (QAAuM), supported by market movements. Core income for the coverage universe is projected to increase by 3.6% quarter-on-quarter (QoQ) and 11.8% year-on-year (YoY), although revenue yields may soften slightly. Banks are expected to see continued loan growth, while net interest margins remain a key monitorable. Within financial services, steady disbursement momentum among auto financiers and housing finance companies is expected to support growth, but hardening bond yields could pressure margins. Changes in cash-market activity may also affect exchange trading volumes. Insurance is expected to see healthy business growth, with profitability and margins remaining important monitorables.

In the automobile sector, dispatches have been supported by retail demand and festive stocking. However, elevated raw material costs, supply-chain disruptions and the lag in passing on input-cost increases are expected to constrain profitability. Operating leverage and price hikes may provide partial relief. Festive demand conversion, inflation and rural cash flows remain key factors to watch. Building materials are expected to see divergent trends, with pipes performing relatively better while wood panels face export-related headwinds. Cement volumes are projected to grow approximately 10% YoY, although elevated fuel and other operating costs are likely to weigh on profitability, keeping pricing actions important.

In consumer staples, double-digit growth is expected, while the outlook for the second half of FY27 remains subject to inflation and rainfall-related uncertainties. Consumer durables are expected to benefit from growth in wires and cables, supported by improved commodity realisations, alongside continued demand for room air conditioners. The education sector’s stationery coverage universe is expected to face pressure, with EBITDA projected to decline 17.7% YoY amid raw material inflation.

Within industrials, capital goods companies focused on transmission and distribution are expected to perform relatively better, while execution challenges may weigh on engineering, procurement and construction activity. Infrastructure execution is expected to remain steady, although order inflows have moderated. Electronic manufacturing services (EMS) companies are expected to report 26.0% YoY revenue growth in Q2FY27, with margins projected to expand by 30 basis points to 9.9% and profit growing 8.6% YoY. Robust order execution and a greater focus on higher-margin opportunities could support performance in subsequent quarters. Renewable equipment is expected to record moderate growth, with margins recovering gradually.

In chemicals, specialty chemical companies are expected to report steady YoY revenue growth, although sequential moderation is anticipated. Domestic agrochemical demand remains under pressure, while firm refrigerant gas prices are expected to support fluorochemical earnings. Metals and mining companies are expected to maintain volumes, with costs remaining a key pressure point. In oil and gas, earnings recovery is expected to be led by oil marketing companies, while upstream producers may benefit from crude realisations; city gas distribution businesses face a more challenging outlook. Power companies are expected to benefit from an improvement in demand.

The outlook for pharmaceuticals is supported by domestic growth and currency-related tailwinds, while healthcare is expected to report a healthy quarter, aided by new bed additions and seasonal demand. Information technology is expected to see selective growth amid broader sector challenges. Telecom performance is expected to remain supported by average revenue per user and subscriber growth.

In the services and consumer-facing segments, logistics companies are expected to deliver a steady quarter despite wage and fuel inflation. Ports are expected to report healthy growth despite operational disruptions. Media is likely to see contrasting trends, with cinema exhibition benefiting from strong occupancy while broadcasters continue to face challenges. Real estate is expected to remain supported by healthy new launches. Textiles are expected to demonstrate resilience despite renewed US tariff-related concerns, while travel and tourism is expected to see steady hospitality performance alongside continued turbulence in aviation.

Overall, PL Capital’s sector-wise previews point to a differentiated earnings environment for Q2FY27. Demand trends, execution strength and sector-specific drivers are expected to support selected industries, while input-cost inflation, margin pressures and uneven demand remain important monitorables. Company commentary and quarterly results will be key to assessing the sustainability of growth and the trajectory of profitability across sectors.

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