With India Inc having turned in a fairly good performance in the September quarter thus far, earnings estimates for the current year have been revised upwards, albeit marginally, by about 50-60 basis points. Earnings for the Nifty50 set of companies are now expected to grow at 9.8-10% in FY26, as companies stay with a neutral-optimistic outlook.
Among the companies whose profit estimates have been raised include Reliance Industries, HDFC Bank and ICICI Bank, Ultratech Cement and Dr Reddy’s Laboratories. Analysts have also upped forecasts for a few IT players that have reported good margins, aided by the weakening currency.
Analysts maintain that the performances have been generally in line with expectations. While there have not been too many surprises, the disappointments too have been few. The estimates for FY27 earnings have remained broadly stable so far with the increase pegged at 16.5-17%. Experts believe these could also be upgraded if results for the December quarter come in as per expectations.
The current round of upgrades has largely been prompted by the resurgence in topline growth as also operating profit margins. For a sample of 1,059 companies (excluding banks, financials and oil marketing companies), net sales have seen a good increase of 11% year-on-year (y-o-y). Operating profit margins have expanded by 51 basis points y-o-y, driving up the operating profit by a strong 14% y-o-y. As such, net profits have risen by a smart 13% y-o-y.
At Mahindra & Mahindra, net revenues increased by 21% y-o-y in Q2FY26, driven by a 16% y-o-y increase in volumes and some price increases while at Baja Auto they went up by 13.7% y-o-y. Metals producer SAIL reported a 16% rise in net sales while drug major Sun Pharma reported a 9% y-o-y increase in topline. Resilient domestic jewellery sales, in an early festive season, pushed up Titan’s topline by a solid 18% y-o-y. Interglobe, airline IndiGo’s parent company, reported a 9.3% rise in total income, ahead of estimates.
Indian Hotels reported consolidated revenue growth of 12% y-o-y, partly thanks to renovations and an extended monsoon, disappointing the Street. A few other consumer-oriented companies also didn’t fare too well, partly hit by the changes to the GST rate framework. Standalone volumes at Dabur, for instance, were up just 2% y-o-y leaving the revenue increase at 4.3% y-o-y. At retailer Trent, revenue growth continued to decelerate in the September quarter, coming in at 17% y-o-y; this was partly due to a sharp 17% y-o-y fall in the revenue per square foot.
The weak volume growth reported by makers of consumer staples in Q2FY26—owing to GST-related destocking issues—is expected to have picked up in the current quarter. Management commentary suggested there has been a modest revival in urban demand.
The results of IT companies indicate that demand trends are stabilising with the headwinds slowing in some sectors and fewer programmes being cancelled. Analysts highlighted a steady deal momentum although pricing pressures persist in some areas. Strategists at Motilal Oswal noted that within the universe of stocks studied by them, the larger and mid-sized companies had fared better than the smaller firms.