India Inc. Earnings Beat Expectations; FY26 Growth To Be Led By Auto, IT Services: JM Financial

India's top companies reported higher-than-expected earnings in the third quarter of the current financial year, according to JM Financial. It said growth in the next fiscal year will be led by automobiles and information technology services.

The Nifty 50 recorded earnings per share growth of 8.9% in the December quarter, ahead of expectations of 5.8% year-on-year, analysts at JM Financial said in a note. Industrials, metals, mining and telecom saw the highest growth.

The brokerage expects a 17.2% Nifty 50 earnings per share growth in fiscal 2026 with automobiles, IT services, oil and gas and banks doing the heavy lifting. Through third-quarter results, the Nifty 50 earnings estimates for fiscal 2025 and 2026 were cut by 0.7% and 1.8%, respectively. "Interestingly, these cuts were made despite the performance being stronger than expected."

About 50% of the small-cap companies have missed expectations, the report said. "Meanwhile, the misses were lower in midcaps and large caps at 34% and 28% respectively."

The economy is doing "ok" but the government capital expenditure has started picking up, Venkatesh Balasubramaniam, Managing Director and Head of Research at JM Financial said in an interview with NDTV Profit.

EPS cuts for large-cap stocks have ended and he does not expect earnings cut. He expects the market to see a 5-7% correction at a broader level and said that the correction in smallcaps and midcaps is over. "This year is not to make money but to save money."

The selling by global funds has not ended and we will not be surprised if inflows in systematic investment plans are negative, Balasubramaniam said.