Nifty Companies Report 18% Profit Growth In Q1 FY27, Highest In 10 Quarters: Report

New Delhi, August 17 - Nifty companies reported an 18% year-on-year increase in profit after tax (PAT) for Q1 FY27, marking the highest growth in 10 quarters, according to a report by Motilal Oswal Financial Services. The report highlighted that the growth was broad-based, with 19 sectors exceeding expectations. The earnings upgrade-to-downgrade ratio turned positive at 1.5 times.

The top 5 contributors to Nifty 50 earnings accounted for 60% of the earnings increase. Apart from the Nifty 50, companies excluding oil marketing companies (OMCs) also recorded strong performance, with an 18% growth in sales, 15% growth in EBITDA, and 22% growth in PAT. Financials, metals, oil & gas (excluding OMCs), technology, and telecom played key roles in the growth.

Mid- and small-cap companies also delivered a strong quarter, with the latter growing by 31%, well above the estimated 22%. Nearly half of the companies in the brokerage's coverage universe beat PAT estimates, with 48% exceeding forecasts and 25% missing. Large-cap earnings grew by 21% YoY, while mid-cap earnings rose by 23%, marking an 11-quarter high.

Small-cap earnings grew an even stronger 31%, led mainly by financials and oil & gas. The outlook for earnings is improving, with 130 companies seeing earnings upgrades of more than 3%, compared to 89 companies that saw downgrades of over 3%, resulting in a 1.5-fold upgrade-to-downgrade ratio. This improvement led to a modest upward revision in Nifty 50 earnings expectations.

The FY27 Nifty EPS estimate was raised by 0.6% to Rs 1,232, while the FY28 estimate was raised by 0.3% to Rs 1,425 from Rs 1,422.