New Delhi: Nifty companies recorded an 18 per cent year-on-year growth in profit after tax (PAT) in the first quarter of FY27, marking the strongest profit growth in 10 quarters, according to a report by Motilal Oswal Financial Services.
The report said the earnings performance was broad-based, with 19 sectors exceeding expectations and the earnings upgrade-to-downgrade ratio turning positive at 1.5 times.
Financials, Metals And Technology Drive Earnings Growth
The top five contributors to Nifty 50 earnings accounted for around 60 per cent of the overall increase in earnings during the quarter.
Beyond the Nifty 50, companies covered by the brokerage, excluding oil marketing companies (OMCs), 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 parameters.
Financials, metals, oil and gas excluding OMCs, technology and telecom emerged as key growth drivers.
Automobiles, chemicals, textiles and real estate also reported strong earnings growth during the quarter.
Mid And Small Caps Deliver Strong Performance
The strong earnings trend extended to mid- and small-cap companies.
Large-cap earnings grew 21 per cent year-on-year, while mid-cap earnings increased 23 per cent, marking an 11-quarter high. Small-cap earnings rose an even stronger 31 per cent, significantly above the 22 per cent estimate.
Financials and oil and gas were among the key sectors driving small-cap earnings growth.
Nearly half of the companies covered by the brokerage beat PAT estimates, with 48 per cent exceeding forecasts and 25 per cent missing expectations. Among large-cap companies, 57 per cent surpassed estimates.
Nifty Earnings Outlook Improves
The earnings outlook also showed signs of improvement, with 130 companies recording earnings upgrades of more than 3 per cent, compared with 89 companies that saw downgrades of more than 3 per cent.
This resulted in an upgrade-to-downgrade ratio of 1.5 times and prompted a modest upward revision in Nifty 50 earnings estimates.
The FY27 Nifty earnings-per-share (EPS) estimate was raised by 0.6 per cent to Rs 1,232, while the FY28 estimate was increased by 0.3 per cent to Rs 1,425, from Rs 1,422 earlier.
However, oil marketing companies remained a drag on overall earnings, with elevated crude oil prices weighing on their performance.