Non-Nifty 50 firms' profit engine fires up, eclipses index giants in Q2

Mid and small-cap companies delivered their fastest earnings growth in seven quarters, lifting their share of India Inc's profits even as Nifty 50 firms saw a slowdown

Non-Nifty 50 companies have recorded a sharp recovery in earnings over the past three quarters, outpacing their Nifty 50 counterparts. The combined net profit of non-Nifty 50 companies rose 22.5 per cent year-on-year in Q2FY26, marking the fastest expansion in seven quarters. 

These non-benchmark index companies also reported a mild revival in revenue growth during the July–September 2025 quarter, reversing a six-quarter slowdown. Combined net sales (gross interest income for banks and non-bank lenders) increased 8 per cent year-on-year, the strongest in five quarters. Their net sales had grown 6.6 per cent year-on-year in Q1FY26 and 6.7 per cent in Q2FY25. 

The combined net profit (adjusted for exceptional gains and losses) of the 2,600 non-Nifty 50 companies in the Business Standard sample reached a record ₹1.81 trillion in Q2FY26, up from around ₹1.48 trillion in Q2FY25 and ₹1.74 trillion in Q1FY26. These firms accounted for 50 per cent of the combined net profit of all listed companies in Q2FY26, against 45.2 per cent in Q2FY25 and 46.3 per cent Q1FY26. The five-year low was 39.5 per cent in Q3FY23. 

Combined net sales (or gross interest income) of non-Nifty 50 firms rose to ₹20.69 trillion in Q2FY26, versus ₹19.17 trillion a year earlier and ₹20.37 trillion in Q1FY26.

 

However, these companies have surrendered share in the overall revenue pool over the longer term. Their contribution to total net sales of all listed companies stood at 54.1 per cent in Q2FY26, marginally higher than 53.7 per cent in Q2FY25 and 54 per cent in Q1FY26, but still lower than a high of 55.6 per cent in Q3FY21.

 

In contrast, Nifty 50 companies posted just 1.2 per cent year-on-year growth in net profit in Q2FY26, the slowest pace in three years. Their combined net sales (or gross interest income) rose 6.4 per cent year-on-year, the weakest growth in at least 17 quarters.

 

Mirroring the broader corporate trend, profit growth among non-Nifty 50 companies was propelled by a surge in earnings from energy and commodity producers, notably state-run oil refiners Indian Oil and Bharat Petroleum, as well as cement makers such as Ambuja Cements.

 

Other major contributors to incremental earnings included lenders such as Sammaan Capital, IDBI Bank, Vodafone Idea, Muthoot Finance, alongside Suzlon Energy, General Insurance Corporation, and Nazara Technologies.

 

Earnings growth was concentrated: Indian Oil and Bharat Petroleum accounted for 40 per cent of the year-on-year rise in combined profit for non-Nifty 50 companies in Q2FY26, while the top five contributors made up 60 per cent of the total growth. By comparison, the two oil refiners contributed 14 per cent of incremental revenue growth -- broadly in line with their share of combined net sales among non-index firms.

 

Excluding BFSI and commodity producers, combined net profit of non-Nifty companies rose 14.2 per cent year-on-year in Q2FY26, up from 7.1 per cent in Q1FY26 but below the 16.4 per cent increase in Q2FY25. Net sales in this segment were up 10.2 per cent year-on-year, the sharpest expansion in 10 quarters.

 

Analysts say the relatively stronger performance of non-Nifty 50 companies suggests firmer growth momentum among mid and smallcap stocks, though geopolitical risks and weak consumption continue to cloud the outlook. “Of the 20 key sectors, 17 reported profit growth in Q2FY26, and oil marketing companies dominated, accounting for 33 per cent of the incremental year-on-year accretion in earnings for Nifty 500 companies. The top 10 incremental profit contributors, primarily from oil & gas, metals, financials and telecom, together contributed around 64 per cent of the incremental year-on-year earnings growth,” analysts at Motilal Oswal Securities wrote in their Q2FY26 review.

 

Elara Capital noted that overall earnings in Q2FY26 were better than expected, led by cyclicals such as energy, cement and metals, though earnings downgrades continued to outweigh upgrades. “In Q2FY26, the upgrade-to-downgrade ratio skewed toward downgrade. Forty-six companies under our coverage received an earnings upgrade, whereas 31 per cent, or 84 companies, saw an FY27 PAT downgrade. The next two quarters will be crucial in determining the durability of this earnings trajectory,” analysts at Elara Capital wrote in their Q2FY26 earnings review.