Indian corporate profits beat forecasts but growth remains concentrated in five sectors
Indian companies delivered a 22% profit expansion that easily beat broker forecasts, though the upside was driven almost entirely by commodities and financials rather than broad consumer demand.
Indian listed companies delivered a robust earnings season, with aggregate profits rising 22% across the Motilal Oswal coverage universe, excluding oil marketing companies. The expansion comfortably exceeded the brokerage’s 15% growth forecast, driven by sales and Ebitda increases of 18% and 15% respectively.
Despite the headline beat and what the brokerage termed a "picture-perfect" period, the underlying profit expansion remains heavily concentrated. Just five sectors generated 73% of the incremental profit for the quarter, indicating that broader corporate India is yet to see a fully synchronized recovery.
Oil and gas producers, excluding state refiners, led the charge by contributing Rs 16,900 crore to the year-on-year profit increase. Metals followed closely with Rs 15,700 crore, marking a sharp turnaround from the bottom ten contributors a year earlier, powered by massive profit surges at Vedanta, Hindalco and JSW Steel.
The financial sector also provided substantial support, with non-bank lenders, private banks and state-run banks adding a combined Rs 19,200 crore. Conversely, earnings were weighed down by InterGlobe Aviation, ITC, Dr. Reddy’s Laboratories and Cipla, while state oil marketing companies posted a combined loss of Rs 18,100 crore due to elevated crude prices.
Growth profiles varied significantly across market capitalizations, with small-cap companies recording a 31% profit surge. However, this was flattered by a weak base from the prior year, and the quality of earnings beats was highest among large-cap stocks, where 57% exceeded expectations compared to just 39% for mid-caps.
Looking ahead, analysts are increasingly optimistic, raising overall fiscal 2027 profit estimates by 2%. The earnings season produced the strongest upgrade-to-downgrade ratio in 22 quarters, with 130 companies seeing estimates lifted by more than 3% against 89 downgrades.
Hindalco received the most aggressive upward revision among Nifty constituents, with its forecast raised by 21.9%. In contrast, InterGlobe Aviation faced the steepest cut, with its estimate slashed by 32.8% after the carrier swung to a quarterly loss of Rs 380 crore.
