In its latest strategy report, Emkay Global Financial Services said that Indian corporates closed FY26 on a resilient note, posting a second consecutive quarter of strong earnings growth despite escalating geopolitical tensions and energy market volatility. It added that robust topline expansion, broad-based sectoral participation, healthy cash flows, and resilient balance sheets have strengthened the earnings outlook for FY27, positioning Indian equities for another year of growth.
The report noted the breadth of growth across companies and sectors during the quarter as nearly 59% of BSE 500 companies reported profit growth exceeding 10% year-on-year, while 39% recorded earnings growth of more than 25%. It added that this represents a significant improvement over the first half of FY26 and underscores the broad-based nature of the ongoing earnings recovery. Corporate earnings also outperformed market expectations, with 48% of Nifty companies delivering positive earnings surprises compared to 32% in the previous quarter, indicating that business fundamentals remain stronger than anticipated.
Strong Topline Acceleration
The aggregate profit after tax (PAT) growth for the BSE 500 companies stood at 13.9% year-on-year in Q4FY26, largely in line with the previous quarter’s performance. The earnings momentum was supported by an acceleration in revenue growth, with topline expansion for non-financial companies rising to 12.3% year-on-year compared to 9.2% in the preceding quarter. While EBITDA margins moderated marginally to 16.4%, earnings quality remained strong, reflecting the underlying strength of corporate India.
The report said that the quarter saw growth being driven by multiple sectors rather than a handful of outperformers. Energy and materials sectors emerged as standout performers, registering earnings growth of 23.8% and 23.1%, respectively. However, the report notes that gains in the energy sector were partially supported by inventory-related benefits, which may moderate in the coming quarters.
It also pointed to strong performers like consumer discretionary companies which reported nearly 18% earnings growth, aided by improving consumption trends and demand recovery, consumer staples sector which maintained healthy momentum with over 15% growth and IT companies which delivered 13.4% earnings growth despite ongoing global macroeconomic uncertainties. Further, it also noted the continued steady performance of financials, recording 13.1% growth and remaining a critical pillar for overall market earnings.
In contrast, industrials remained the key laggard, witnessing an 8.9% decline in profits due to company-specific losses in select large constituents.
Broader Market Expansion
The quarter also saw the growing strength of the broader market beyond large-cap stocks. The focus was on mid-cap companies as they significantly outperformed their larger peers, registering an impressive 34.2% year-on-year profit growth in Q4FY26, compared to 10.3% growth among large-cap companies and 10.4% growth in the small-cap segment. The report said that strong earnings delivery from mid-caps highlights the expanding opportunities across India’s corporate landscape and signals greater participation in the country’s economic growth story.