Telecom, energy, and commodities may lead Q1FY27 earnings growth

Telecom operators and producers of commodities and energy are likely to lead the earnings-growth story for April-June (Q1FY27). 

According to various brokerage estimates, upstream fuel major Oil & Natural Gas Corporation (ONGC), telecom operator Bharti Airtel and metal firm Hindalco Industries are likely to account for the bulk of the incremental growth in earnings on a year-on-year (Y-o-Y) basis. Reliance Industries, Hindalco Industries and ONGC are expected to lead the growth charts in revenue. 

The combined net profits of India’s top 50 listed companies that are part of the Nifty 50 index are expected to grow 8.1 per cent Y-o-Y, an improvement from 4.6 per cent in Q4FY26 and but a slowdown from 9 per cent in Q1FY26. Their profits are expected to reach around ₹2.12 trillion from about ₹1.96 trillion in Q1FY26. Brokerages expect faster growth in revenue, with the combined net sales of the index companies (net interest income in the case of banks and non-bank lenders) expected to grow 17.8 per cent — likely to be the fastest in top line in the last 13 quarters. 

For comparison, their net sales were up 12.4 per cent Y-o-Y in Q4FY26. They increased 5.3 per cent Y-o-Y in Q1FY26.

Their net sales (or net interest income for banks and other lenders) are expected to grow to ₹15.98 trillion in Q1FY27 from ₹13.57 trillion a year earlier. 

The analysis is based on the average earnings estimates of 47 companies that are part of the index. The data excludes the numbers for Bajaj Finance, which is a subsidiary of Bajaj Finserv, another index company. 

The other excluded companies are Adani Enterprises and Jio Financial Services. The historical data includes the quarterly figures of Tata Motors (Commercial Vehicles), which was demerged from Tata Motors (now Tata Motors Passenger Vehicles) in September last year. The demerged company is not part of the index. 

The earnings estimates have been sourced from Motilal Oswal Financial Services, Kotak Institutional Equity, IDBI Capital, Nuvama Research, Anand Rathi Securities, Equirius Capital, Yes Securities, Antique and BOB Capital. 

ONGC is likely to be the biggest earnings driver, with 88.6 per cent growth in its standalone net profit, and account for 44.6 per cent of earnings growth of all Nifty 50 companies in the quarter. 

Bharti Airtel is likely to report a 50.4 per cent Y-o-Y jump in its consolidated net profit in Q1FY27 while Hindalco Industries’ consolidated net profit is expected to rise 53.6 per cent. 

These three companies together are expected to account for nearly 77 per cent of incremental growth in net profit of the index companies. At the other end of the spectrum, Reliance Industries, Tata Motors Passenger Vehicles, and Interglobe Aviation are expected to report a Y-o-Y decline in net profit. 

In all 10 index companies are likely to report a Y-o-Y decline in net profit due to a margin contraction owing high prices of energy and commodities. In comparison, Reliance Industries with a 27.8 per cent Y-o-Y rise, followed by Hindalco Industries (25.6 per cent) and ONGC (45.6 per cent) are seen accounting for a major chunk of the increase in Nifty 50’s combined revenue. Together these three companies will account for 41 per cent of incremental growth in the Nifty 50 companies’ net sales in the first quarter. In contrast, ITC and Dr Reddy’s Lab are expected to report a Y-o-Y decline in net sales in Q1FY27. 

“We expect earnings for the Motilal Oswal Financial Services Universe to decline by 3 per cent Y-o-Y (the lowest growth since Sep 20) and Nifty earnings to grow 10 per cent Y-o-Y (the highest in four quarters) in 1QFY27. Excluding financials, their earnings are expected to decline 12 per cent Y-o-Y (MOSL universe) and grow 12 per cent Y-o-Y (Nifty), respectively. Barring global commodities (Metals and O&G), our Universe and Nifty are likely to report 11 per cent and 6 per cent YoY earnings growth, respectively, for the quarter,” wrote the Motilal Oswal research team, led by Deven Mistry, in their earnings estimates for Q1FY27. 

Sanjeev Prasad, Sunita Baldawa and Anindya Bhowmik of Kotak Institutional Equity wrote in their earnings preview for Q1FY27: “We expect Q1FY27 net income of the KIE universe (ex-OMCs) to increase 14.6 per cent YoY, driven by capital goods (strong demand conditions for most sub-sectors but divergent profitability trends across companies), diversified financials (healthy growth, stable asset quality and NIM expansion), metals & mining (elevated commodity prices) and telecommunication services (higher average revenue per user) sectors.”