- India's Q2 corporate earnings season starts Thursday with top firms reporting over weeks
- Morgan Stanley expects SBI and Bharti Airtel to lead earnings growth among top companies
- IndiGo operator InterGlobe Aviation projected as weakest performer amid cost pressures
India's corporate earnings season is set to begin on Thursday, with top listed companies scheduled to present their second-quarter scorecard over the next four-to-five weeks. Among the top 80 companies, part of the Nifty 50 and the 30-stock Sensex universe, analysts have sounded bullish on the State Bank of India and Bharti Airtel Ltd., whereas they've aired caution over IndiGo operator InterGlobe Aviation Ltd.
SBI and Airtel are expected to emerge as primary anchors of the Q2 earnings pool, Morgan Stanley analysts said in a note, while projecting IndiGo as the weakest performer in the pack.
The company-level divergence comes amid a broader paradox across India Inc's Q2 estimate, as a resilient top-line expansion is seen to be clashing with a commodity-driven margin squeeze across seven of the 10 tracked sectors.
SBI, Airtel To Drive Profit Pool
According to Morgan Stanley's Q2 strategy note authored by Ridham Desai, SBI and Airtel will serve as the biggest contributors to aggregate BSE Sensex earnings. Overall earnings growth is expected to rise sequentially, driven primarily by consumer discretionary, materials, and communication services.
In contrast, bottom-line growth will remain uneven across corporate balance sheets. Energy and industrials are forecast to report earnings declines on a quarter-on-quarter basis, with IndiGo expected to trail the pack as the weakest performer amid cost headwinds.
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Resilient Topline Clashes With Cost Heat
The pressure on profitability contrasts with a steady sales environment. Morgan Stanley expects Nifty revenue growth to accelerate to 19% quarter-on-quarter in the September quarter, up from 18% in the previous three months, with all 10 sectors registering positive revenue growth led by energy, consumer discretionary, and industrials.
Jefferies' India strategist Mahesh Nandurkar also highlighted firm demand trends, projecting a 17% year-on-year revenue growth for its coverage universe excluding oil and gas, metals, and financials.
Seven In 10 Sectors Face Margin Drag
Despite firm revenues, profitability is absorbing the blow from higher commodity and input costs. Morgan Stanley projects operating margins to decline across seven out of 10 sectors, with energy and healthcare expected to witness the sharpest drops. Materials and utilities are seen as the rare exceptions delivering margin expansion.
Jefferies similarly flagged that higher commodity costs will squeeze margins in select pockets. However, the brokerage expects overall earnings growth to remain durable at 15% year-on-year, keeping its FY27 MSCI India earnings growth projection steady at 14%.
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