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Brokerages are expecting Indian companies to show another quarter (April-June 2025) of single-digit earnings growth and a further slowdown in revenue.
Overall growth in corporate profits in the April-June 2025 quarter (Q1FY26) is, however, likely to be better than in Q4FY25, led by margin gains for commodity producers such as JSW Steel, Hindalco, Reliance Industries Ltd (RIL), Ultratech Cement, and telecom operator Bharti Airtel. According to various brokerage estimates, the combined net profits of the Nifty 50 companies are likely to grow 4.6 per cent year-on-year (Y-o-Y) in Q1FY26, an improvement from 0.5 per cent in Q4FY25 and 3.6 per cent in the June 2024 quarter (Q1FY25).
Brokerages, however, expect a further slide in revenue growth due to weak demand in key sectors such as banks, information-technology services, fast-moving consumer goods, automobiles, oil and gas, and mining and metals.
According to brokerage estimates, combined net sales (net interest income in the case of lenders) are expected to grow 5.5 per cent Y-o-Y in Q1FY26, growing at the slowest pace in at least the last 18 quarters.
For comparison, index companies’ net sales were up 7 per cent Y-o-Y in Q4FY25 and 8.6 per cent in Q1FY25.
Their combined net profits are expected to grow to ₹1.92 trillion in Q1FY26 from ₹1.84 trillion a year earlier.
In comparison, their combined net sales are anticipated to increase to ₹13.62 trillion in Q1FY26 from ₹12.92 trillion in the equivalent period last year.
At this rate, the Nifty 50 companies’ earnings growth will be in single digits for a fifth consecutive quarter while net sales will grow in single digits for a ninth consecutive quarter beginning the June 2023 quarter (Q1FY24).
The banking, financial services, and insurance (BFSI) sector is likely to be a laggard in Q1FY26 and its net profits are expected to decline 0.6 per cent Y-o-Y in the quarter.
Its combined net interest income is likely to grow 7.2 per cent Y-o-Y.
The combined net profits of the Nifty 50 companies other than BFSI are expected to grow 7.4 per cent Y-o-Y in Q1FY26, an improvement from 2.7 per cent Y-o-Y growth in Q4FY25 and 3 per cent Y-o-Y growth in Q1FY25.
However, growth in combined net sales of the index companies other than BFSI is expected to slow further to 5.2 per cent Y-o-Y in Q1FY26 from 6.6 per cent Y-o-Y in Q4FY25 and 6.4 per cent Y-o-Y in Q1FY25.
The hydrocarbon sector, led by RIL, is expected to outperform the rest and it is also likely to benefit from faster earnings growth at its telecom division — Reliance Jio. RIL’s net profit is expected to grow 31 per cent Y-o-Y in Q1FY26 while its net sales are expected to go up 5.6 per cent in the quarter. The combined net profits of index companies other than BFSI and oil and gas are expected to grow by 5.7 per cent Y-o-Y in Q1FY26, slowing from 6.5 per cent Y-o-Y growth in Q4FY25 and 10.1 per cent
in Q1FY25.
These companies’ combined net sales are likely to grow 5.8 per cent Y-o-Y in Q1FY26, down from 6.9 per cent Y-o-Y growth in Q4FY25 and 5.9 per cent Y-o-Y growth in Q1FY25.
“Bottom-up aggregates of our analyst estimates suggest a 5 per cent Y-o-Y growth in 1QFY26 Nifty 50 earnings and 10 per cent Y-o-Y growth in MOFSL universe. The expectation of a 10 per cent Y-o-Y growth in MOFSL 1QFY26 earnings is skewed by a sharp 42 per cent Y-o-Y growth in the oil & gas sector, and excluding global commodities, the growth rate will still be a modest 6 per cent,” write analysts at Motilal Oswal Financial Services (MOFSL) in their earnings preview for the first quarter.
