Q2 Earnings Preview: Banks, financials to drive strong double-digit growth

FY27Q2 Earnings Preview: Brokerages expect corporate earnings to remain strong in the July-September 2026 quarter, with financials, automobiles, metals, oil and gas, and telecom emerging as key growth drivers. However, elevated commodity costs are expected to weigh on margins across several sectors, keeping the earnings recovery uneven. Jefferies expects companies in its coverage universe, excluding oil and gas, metals and financials, to post 17 per cent year-on-year revenue growth in the quarter, while overall earnings growth is seen at 14 per cent. The brokerage expects aggregate Ebitda margins to contract by 0.6 percentage points sequentially and 1 percentage point year-on-year, with 62 per cent of companies likely to report a year-on-year decline in margins. It, however, expects FY27 MSCI India earnings growth at 14 per cent. The brokerage noted that Banks likely to post healthy core (ex-treasury) earnings growth of 15 per cent y-o-y with strong loan growth of 19 per cent y-o-y and lower opex & credit costs. Meanwhile, NBFCs are expected to report a profit growth of over 34 per cent led by robust 21 per cent loan growth and lower credit costs. Jefferies added that within consumer discretionary, Jewellers (Titan, Kalyan) are expected to post over 30 per cent Ebitda growth, Retailers (Trent, Dmart) to see a sequential uptick in revenue growth and are expected to post Ebitda growth of over 20 per cent. Most 2W auto OEMs (TVS, Eicher, Bajaj) are expected to post strong 20 per cent topline growth and over 18 per cent Ebitda growth. Kotak Institutional Equities is more upbeat, estimating 21 per cent year-on-year growth in net income for its coverage universe, driven by automobiles and components, banks, diversified financials, metals and mining, oil and gas, and telecom. It also expects Nifty 50 net profits to rise 21 per cent year-on-year. At the sector level, commodity chemicals, consumer staples, fertilisers and agrochemicals, and pharmaceuticals are expected to remain weak. The brokerage noted that, “we expect most sectors to deliver double-digit yoy growth in net income in 2QFY27.” The broekrage also added that it expects earnings per share of the Nifty 50 index at ₹1,227 for FY2027 and ₹1,398 for FY2028. Motilal Oswal Financial Services expects the strongest earnings growth among the three brokerages, with aggregate earnings for its universe projected to rise 22 per cent year-on-year, the highest in 11 quarters. Excluding oil marketing companies, earnings growth is seen at 24 per cent, while Nifty 50 aggregate earnings are expected to increase 27 per cent, which would be the highest growth in 17 quarters. The brokerage noted that, “Nifty 50 aggregate earnings are expected to grow 27 per cent y-o-y (the highest in 17 quarters) in 2QFY27” Motilal Oswal noted that the overall earnings growth is anticipated to be strong. Earnings are likely to be anchored by Financials, led by both Private Banks with over 24 per cent growth y-o-y & PSU Banks with over 27 per cent y-o-y growth and NBFCs with over 24 per cent growth, Metals at 44 per cent growth y-o-y, O&G.  Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers discretion is advised. Disclosure: Entities controlled by the Kotak family have a significant shareholding in 'Business Standard'