Outlook dims: 72% of Nifty50 firms brace for EPS downgrades in FY26

Stocks with the sharpest EPS downgrades included IndusInd Bank, Adani Enterprises, Eicher Motors, ONGC, and Tata Motors, according to JM Financial

As the fourth quarter and fiscal year earnings season concluded, a majority of India’s top listed companies saw their earnings per share (EPS) estimates downgraded for the financial year 2026 (FY26).

 

About 72 per cent, or 36 out of 50 Nifty50 companies, saw a cut in their FY26 estimated EPS in March 2025, according to analysts at JM Financial. In contrast, only eight companies, or 16 per cent of the Nifty50, saw an upgrade in FY26 EPS estimates

 

Sector-wise, all automobile and oil and gas stocks saw EPS cuts, while 88 per cent of consumer stocks are poised for downgrades. Among other sectors, 67 per cent of banks and 60 per cent of information technology (IT) stocks will see EPS cuts for the current fiscal. In addition, 60 per cent of metals and mining stocks and 75 per cent of non-banking financial companies (NBFCs) were affected. 

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Subdued management commentary and macroeconomic uncertainties are likely factors behind the EPS cuts, JM Financial reasoned. The downgrade cycle continues, with EPS reductions in May sharper than those recorded in March 2025 and April 2025.  

Meanwhile, on the upgrade side, only one bank saw an upward revision in EPS estimates, while all insurance companies received upgrades. Among other sectors, 40 per cent of metals and mining companies, and 50 per cent each in the infrastructure and ports, and cement sectors saw EPS upgrades.

 

From May 2024 to May 2025, the Nifty50 delivered a 9.9 per cent return, while FY26 and FY27 EPS estimates were cut by 9.4 per cent and 8 per cent, respectively, JM Financial said in the report. In May 2025 alone, EPS estimates for FY26 fell by 2 per cent month-on-month (M-o-M), and FY27 by 1.5 per cent M-o-M.

 

Stocks with the sharpest EPS downgrades included IndusInd Bank, Adani Enterprises, Eicher Motors, ONGC, and Tata Motors, according to the brokerage. On the other hand, the biggest EPS upgrades were seen in Bharat Electronics, Tata Steel, Adani Ports, SBI Life, and Hindalco Industries. 

 

As per an earlier report by Business Standard, the slowdown in earnings in recent quarters had weighed on EPS and valuation ratios of benchmark equity indices. The index underlying EPS is up just 4.7 per cent Y-o-Y during the earnings season so far, growing at the slowest pace since 2017, barring the period of Covid in 2020. 

 

In the broader market, the combined net profit (adjusted for exceptional gains and losses) of 1,555 companies (excluding their listed subsidiaries) grew 6.6 per cent Y-o-Y in Q4FY25, well above most brokerage estimates. In their earnings previews, various brokerages had projected Y-o-Y growth of -5 per cent to 1 per cent for companies in their coverage universe.

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