JPMorgan's latest India Equity Strategy report signals the beginning of a long-awaited earnings recovery for Indian corporates in the first quarter of the ongoing financial year (Q1FY26). This comes on the eve of the earnings season kicking off on Thursday with IT giant TCS reporting its performance for the months of April, May and June in 2025.
JPMorgan also expects India's benchmark index, Nifty 50, to trade between a base case target of 26,500 and a bull case target of 30,000 over the next six to nine months.
When it comes to earnings, the brokerage forecasts a growth of 7% year-on-year driven by the low base from the previous year and a resurgence in economic momentum. JPMorgan anticipates that the current quarter will serve as a transition from underwhelming earnings and show decent recovery.
While sectoral divergence remains sharp, analysts at the firm suggest that this quarter could mark a turning point following three subdued earnings cycles.
"We believe this quarter sets the groundwork for an earnings rebound, driven by a low base and a revival in economic momentum,” JPMorgan said in their preview note. The Reserve Bank of India’s liquidity measures — which have led to a Rs 2.9 trillion system surplus as of July 8 — are expected to support sentiment and valuations across sectors.
Healthcare and Insurance Lead the Pack
According to JPMorgan, healthcare is one of the most promising sectors this quarter. "We expect our covered companies to report healthy revenue growth of 15% and Ebitda growth of 19% YoY in Q1FY26," the brokerage noted, citing capacity additions, higher tariffs, and low base effects as key drivers. Companies like Fortis and Medanta are expected to deliver strong numbers, aided by upticks in occupancy and operating leverage.
Insurance is another bright spot. "Private life insurers are likely to post over 8% YoY VNB growth, largely volume-driven," JPMorgan stated. Non-life players may outperform with "15% YoY earnings growth, supported by higher investment income and top-line recovery." The firm prefers SBI Life, LICI, and ICICI Lombard in the current cycle.
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Building Materials And Capital Goods Show Strength
Within the building materials universe, cement companies are expected to post steady earnings, buoyed by resilient pricing. "QoQ volumes may be weaker, but price gains should hold EBITDA/tonne within 4Q ranges," JPMorgan observed, adding that seasonal headwinds and large capacity additions later in the year could cap long-term valuation upside.
Capital goods also appear well-positioned to benefit from improving industrial momentum. "PMI trends remain positive and macro tailwinds such as low inflation and stable rates support investment activity," the report noted, suggesting the sector may continue to ride India’s capex cycle.
Muted Quarter for Banks, IT, and Autos
Despite being a top pick in JPMorgan’s model portfolio, banks are expected to post only modest growth. "Core operating profit will be key, as NII surprises and cost metrics drive divergence, especially among NBFCs," analysts said. While PSU banks could see some re-rating if asset quality holds, mid-tier banks may witness a "course correction" on limited quarter on quarter profit growth.
The outlook for IT services remains tepid due to macro uncertainty and client pricing pressure. "We expect a softer-than-seasonal quarter with reset expectations, especially for Tier 1 names," JPMorgan wrote. Midcaps like Coforge, Infosys and TechM remain preferred over larger peers like TCS and Wipro. The report also flagged ongoing "AI deflation" and potential downside risks to revenue conversion.
The auto sector, which had seen strong momentum last year, is likely to act as a drag this quarter. Though not elaborated in detail, JPMorgan includes it in the list of underperformers along with defense, gas utilities, and consumer staples.
Mixed Trends Across Consumption Sectors
Consumer staples are expected to deliver a "mixed bag," with divergent rural and urban trends. "We forecast flat to declining Ebitda YoY for most names, though a few such as Marico Ltd. and Tata Consumer Ltd. may show double-digit revenue growth," JPMorgan noted. Seasonal disruptions and weak margin trajectories are areas of concern.
QSR companies are faring slightly better. "We expect delivery outperformance, especially from Jubilant FoodWorks Ltd., which should clock 12% like-for-like growth aided by extended store hours," the report highlighted. However, overall margin pressure remains due to operating de-leverage and cost inflation, especially for Devyani Ltd., Sapphire Ltd., and Westlife Foodworld Ltd.
Metals and Oil & Gas: A Balancing Act
In metals & mining, earnings are expected to be uneven. "We see JSW Steel delivering strong YoY Ebitda growth, while aluminum producers like Hindalco may face contraction due to weak prices and US tariffs," JPMorgan said. The brokerage prefers Tata Steel Ltd., JSW Ltd., and Hindalco Ltd. among its picks.
Oil & gas players such as RIL are likely to post steady earnings. However, volatility in crude could weigh on the performance of OMCs. "Each OMC is expected to book large inventory losses in Q1, a reversal from March quarter gains," the note cautioned. On the city gas front, lower input costs may offer some relief.
Market Outlook: Range-Bound With Upside Potential
Despite the mixed sectoral performance, JPMorgan remains constructive on Indian equities over the next six to nine months. "We expect Nifty 50 to trade between our base 26,500 and bull-case 30,000 targets," the firm noted, highlighting that proactive monetary policy and improving economic indicators create fertile ground for earnings to accelerate.
Their preferred sectors going forward include banks, consumer, hospitals, real estate, defense, and power.
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