Profit growth at Nifty 50 firms hits 10-quarter high, boosts outlook

Corporate India experienced better-than-expected earnings in the June quarter, with Nifty 50 companies achieving an 18% growth rate, marking a 10-quarter high. This positive trend boosted expectations of sustained growth, despite margin pressures, according to five brokerages. Profit and revenue growth were strong across all sectors, with large-, mid-, and small-cap companies reporting impressive results.

The only sector that underperformed was oil marketing firms, due to Middle East uncertainties. Nineteen sectors exceeded estimates, and the upgrade-to-downgrade ratio improved to 1.5, indicating a broad-based improving outlook for the rest of the fiscal year. Factors such as festive demand, GST-related consumption support, credit expansion, and investment activity are anticipated to support fiscal 2027 earnings.

Leading companies like Hindalco, Reliance Industries, JSW Steel, ONGC, and Bharti Airtel drove the Nifty 50 earnings beat. Lenders benefited from faster loan growth, low credit costs, and operating leverage, while non-bank lenders saw robust growth in assets under management and benign asset quality. Gains in metals were attributed to improved pricing, while retail, jewelry, paints, selected internet companies, and consumer staples reflected resilient demand, premiumization, and price-led growth.

However, oil marketing companies faced sharp losses due to elevated crude prices, which heavily impacted earnings. Brokerages also noted margin pressure across sectors, as higher prices for metals, crude derivatives, palm oil, freight, and wages weighed on profitability. Sectors such as autos, consumer goods, and logistics were particularly affected. IT services faced AI-linked pricing pressure, while lenders experienced margin compression.