Nifty 50 firms post 10-quarter high profit growth
What's the story
India's Nifty 50 companies have reported an impressive average profit growth of 18% in the June quarter, a 10-quarter high. The robust performance has exceeded expectations and strengthened hopes for continued growth despite margin pressures. According to five brokerages, the strong earnings were seen across large-, mid-, and small-cap sectors. Motilal Oswal described this quarter as "picture perfect," with oil marketing firms being the only exception amid Middle East uncertainty.
Market performance
Motilal Oswal sees broad-based improvement in profit outlook
Nineteen sectors surpassed estimates, and the upgrade-to-downgrade ratio improved to 1.5, according to Motilal Oswal.
This indicates a broad-based improvement in the profit outlook for the rest of fiscal 2027.
The brokerages expect festive demand, GST-related consumption support, credit expansion, and investment activity to drive earnings growth in fiscal 2027.
Sector leaders
Lenders benefited from faster loan growth
Large-cap companies such as Hindalco, Reliance Industries, JSW Steel, ONGC, and Bharti Airtel were the top performers on the Nifty 50 index.
Jefferies noted that lenders benefited from faster loan growth and low credit costs. Non-bank lenders also witnessed strong growth in assets under management with generally stable asset quality.
Metals sector benefited from improved pricing while retail, jewelry, paints, and selected internet companies, among others, showed resilient demand and price-led growth.
Market challenges
Oil marketing companies posted sharp 1st-quarter losses
The upbeat sentiment of analysts did not include oil marketing companies, which posted sharp first-quarter losses.
High crude prices have outstripped strong refining margins, making earnings highly sensitive to fuel-price pass-through and inventory effects.
Brokerages have also flagged margin pressure across sectors due to higher costs of metals, crude derivatives, palm oil, freight, and wage costs impacting profitability in autos consumer goods and logistics sectors.