Net profit of India’s Nifty 50 companies may continue to be lukewarm at not more than 4.5% without accounting for oil companies in the first quarter of the current fiscal, according to equity research analysts.
“We expect 1Q FY26 net income of the KIE universe to increase 10.6% yoy, largely driven by a strong rebound in profits of the oil marketing companies (OMCs). Excluding OMCs, net income will see a modest increase of 4.5% yoy. The net income of OMCs will rise sharply, driven by higher gross refining margins (GRMs) and strong marketing margins,” said analysts at Kotak Institutional Equities.
Analysts at Equiris Securities were a bit more conservative, forecasting a 3% growth in net profit of companies whose numbers they deal with. “Industrials (ex-defence), capital market, NBFC, chemical, IT, healthcare, OMCs, and cement will report strong earnings growth. Autos ( except ancillary), consumer durables, and construction will report decline in earnings and FMCG, banks, building materials and metals will report flat earnings,” Equiris said in the report.
Barring some sectors including health care and telecom, which are expected to show some optimism, most sectors will have no positive surprises in Q1FY26, said Shrikanth Chouhan, Head of Research at Kotak Securities.
“This time it will be difficult for banks to show decent numbers because they have not reduced rates and cannot do so on savings. Because of that, the margin compression can be possible,” Mr. Chouhan said, but assured that this will alleviate after September after new CRR requirements (3%) kick in.
The outcome of a slow earnings growth will be increased outflow of foreign investments and a correction in the value of stocks, said Mr. Chouhan.
Growth of net profit of private sector companies have slowed on a year-on-year basis for at least three quarters now and this led to outflow of foreign money from Indian equities as the price of the domestic stocks did not justify their fundamentals.
Published – July 10, 2025 07:55 pm IST
