Indian Nifty companies and “India Inc” see strong growth, with margins pressured by costs

New Delhi, Aug 17: Nifty companies reported 18 per cent year-on-year growth in profit after tax (PAT) in Q1 FY27, the highest growth in 10 quarters, a report said on Monday.The report from Motilal Oswal Financial Services said the strength was broad-based, with 19 sectors exceeding expectations and the earnings upgrade-to-downgrade ratio turning positive at 1.5 times.The top 5 contributors to Nifty 50 earnings together accounted for 60 per cent of the increase in earnings.Broad-based earnings growthThe positive trend was visible well beyond the Nifty 50. Excluding oil marketing companies (OMCs), the companies covered by the brokerage recorded 18 per cent growth in sales, 15 per cent growth in EBITDA and 22 per cent 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 per cent YoY, while mid-cap earnings rose 23 per cent, marking an 11-quarter high.Small-cap earnings grew an even stronger 31 per cent, well ahead of the 22 per cent estimate, led mainly by financials and oil & gas.PSB Confluence 2026 Outcomes To Shape High-Powered Banking Reforms Committee For Viksit BharatUpgrades improve outlookNearly half of companies in the brokerage’s coverage universe beat PAT estimates, with 48 per cent exceeding forecasts and 25 per cent missing, while among large caps, 57 per cent topped estimates.The earnings outlook is also improving as a total of 130 companies saw earnings upgrades of more than 3 per cent, compared with 89 companies that saw downgrades of more than 3 per cent, resulting in a 1.5-fold 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 per cent to Rs 1,232, while the FY28 estimate has been raised by 0.3 per cent to Rs 1,425 from Rs 1,422.Also Watch:Sector-wise performanceFinancials, 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.(Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)

ET Intelligence Group: India Inc reported a 19.4% year-on-year revenue growth in the June quarter - the strongest in at least nine quarters - driven by strong performance in the auto, banking, metals, and pharma sectors.While net profit also grew in double digits at 11%, rising input costs made it the slowest growth rate in a year. In the coming quarters, festivals and wedding season, and focus on product premiumisation are expected to sustain revenue momentum and support future profitability.For a common sample of 3,589 companies, revenue net profit grew in double digits for the third and fourth consecutive quarter respectively. In addition, the momentum was stronger in the case of smallcap and midcap companies. "Nifty 50 and Nifty 100 delivered EPS (earnings per share) growth of 11.0% and 8.3%, respectively, while the Midcap 150 and Smallcap 250 reported significantly stronger growth of 34.0% and 36.4% in that order," said Feroze Azeez, Joint CEO, Anand Rathi Wealth.Banking and finance companies continued to lend support to the sample's bottomline. Excluding the lending sector, the sample's net profit growth shrank to 5.4% largely on account of a poor performance by the oil and gas sector due to higher fuel marketing losses and rising LPG under-recoveries amid volatile international energy prices. Excluding oil and gas companies, the sample's net profit growth improved to 20.9% for the June quarter.133284324Read Also: Will Sensex, Nifty continue to bleed on Monday? 4 factors which will drive D-Street action this weekThe total sample's operating margin contracted to 16.6% in the June quarter from 19.6% in the year-ago period, reflecting the impact of higher input cost inflation.Excluding banking and finance companies, the sample's raw material costs relative to revenue increased to 38% -- the highest in at least 13 quarters -- from 33.6% a year ago. The quarterly range for this ratio was 33-35% during the past three years.The June quarter margins remained under pressure due to elevated input costs though the impact was partially cushioned by the utilisation of lower-cost inventory," said Vinod Nair, Head of Research, Geojit Investments. He expects this benefit to moderate in the September quarter as higher-cost inventory flows through the profit and loss account while monsoon-related disruptions may pose near-term challenges for select sectors. "Nevertheless, premiumisation trends and seasonal demand from the festive and wedding periods are expected to provide support," Nair added.On the sector front, banking and finance, capital goods, healthcare, retail and jewellery companies reported strong performance while sectors such as automobiles, cement, consumer goods, and oil and gas reported pressure on profits and profitability. "The strong performance of sectors including financials and capital markets suggests continued strength in credit growth, asset quality and market activity," said Azeez.For the remainder of the current fiscal year, analysts expect a broad based improvement in financials with trend in commodity prices as a key decisive factor. Aziz expects around 13% EPS growth in large caps and a stronger growth of 18-20% for midcaps and smallcaps. "Overall, we remain constructive on the earnings outlook, while maintaining a selective approach based on valuations and earnings across sectors and market-cap segments," Azeez said.Nair expects continued strength in credit growth, infrastructure spending and capex activity to support earnings momentum. "However, commodity price volatility, inflation trends and geopolitical developments remain key monitorable," Nair said.