Morgan Stanley sees India Inc.'s earnings at a 19-quarter low in the January–March period. There's likely to be a single-digit decline in profit due to weak revenue growth and margin contraction. Rising uncertainty will also likely weigh on estimates, according to the brokerage.
Indian corporates' margins are likely to contract for the first time in two years. Revenue growth for the BSE Sensex and NSE Nifty 50 companies will be 3%. Morgan Stanley's analysts expect revenue, Ebitda or operating profit, profit before tax, and net profit growth of 5%, 3%, and 6% on an annualised basis, respectively, the brokerage said.
Nevertheless, the positive is that nine out of 10 sectors will likely deliver good revenue growth, with communication services, industrials, and healthcare leading the pack. The energy sector will drive an annual decline in revenue, according to Morgan Stanley.
Bharti Airtel Ltd. and Infosys Ltd. should be the biggest contributors to aggregate BSE Sensex earnings, while State Bank of India is expected to be the poorest performer, Morgan Stanley said.
Margins will likely decline for eight out of 10 sectors. Communication and healthcare will likely see margin expansion.
Financial Year 2026 Earnings Outlook
The consensus estimates for financial year 2026 earnings growth is 3% below Morgan Stanley's estimates. Moreover, the consensus estimate has declined by 2% in past three months to 16%, while revisions breadth is at −4%
Morgan Stanley estimates three-year CAGRs in Sensex and Nifty 50 revenue and profit to stand at 8% and 10%, respectively for the April–June quarter.
Energy and communication services witnessed the most positive earnings revisions in last three months. Morgan Stanley is recommending lenders, select consumer, and industrial stocks in the earnings season.
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