India Inc reported strong earnings growth in the first quarter of FY27, delivering a broad-based beat, with most sectors exceeding analysts' estimates.
The net profit of Nifty 50 companies grew 18% year-on-year (YoY), a 10-quarter high, according to Motilal Oswal Financial Services. The growth was higher than the brokerage firm's estimates of 10%.
However, only five companies - ONGC, Hindalco Industries, Reliance Industries, JSW Steel and Bharti Airtel - accounted for 60% of the incremental earnings.
Conversely, InterGlobe Aviation, ITC, Dr Reddy's Laboratories, Tata Motors Passenger Vehicles, and Cipla dragged Nifty earnings lower.
Motilal Oswal described the June quarter earnings as a “picture-perfect” period of broad-based performance, with 19 sectors exceeding its expectations.
The brokerage's coverage universe, excluding OMCs, reported sales, EBITDA and PAT growth of 18%, 15% and 22% YoY, respectively, as against its estimates of 15%, 10% and 15%.
This growth was fueled by BFSI, Metals, O&G (ex-OMCs), Technology, and Telecom. In contrast, the primary drags on earnings were OMCs, Cement, and InterGlobe Aviation, MOFSL said.
Nifty EPS Sees Modest Upgrade
MOFSL raised Nifty EPS estimate for FY27 by 0.6% to Rs 1,232, largely owing to Reliance Industries, Hindalco Industries, ONGC, ICICI Bank, and State Bank of India (SBI).
The FY28E EPS was also raised by 0.3% to Rs 1,425 from Rs 1,422, due to upgrades in SBI, ICICI Bank, Hindalco Industries, Bajaj Finserv, and Bajaj Auto.
Small-Caps Outperform
Small-cap companies (186 companies) outperformed significantly, delivering strong earnings growth of 31% YoY as compared with estimates of 22%, supported by a favorable base, and led primarily by Financials and Oil & Gas.
Multiple small-cap sectors, such as NBFC-Lending, Private Banks, Oil & Gas, NBFC-Non-Lending, and Chemicals, lifted the overall performance. These sectors contributed ~69% to the incremental YoY accretion in earnings, MOFSL said.
Top Stock Picks
Within Nifty 50, MOFSL's top stock ideas include Bharti Airtel, ICICI Bank, SBI, Titan Company, Mahindra & Mahindra (M&M), Bharat Electronics, Eternal, Hindalco Industries, Shriram Finance, InterGlobe Aviation, and Apollo Hospitals.
Among non-Nifty 50 companies, it picks TVS Motor Company, BSE, GE Vernova T&D, HDFC AMC, Lenskart Solutions, Indian Hotels, Meesho, Dixon Technologies, Coforge, Radico Khaitan, Delhivery, Kirloskar Oil Engines, RBL Bank, TBO Tek, and Arvind.
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