Corporate India earnings are expected to improve in FY27 despite higher crude oil prices in Q1FY27, which are expected to create inflationary pressure amid the Iran-US war.
JM Financial has revised its estimated Nifty 50 earnings per share (EPS) growth for FY2027 to 17.1% from 15.1% previously estimated. The main sectors driving this growth are likely to be automobileMetals and Mining, NBFC, telecommunication And infrastructure.
However, JM Financial said risks still remain as India Inc has seen a repeated downward trend in earnings in recent years. “In the background of rise crude oil pricesJM Financial said, due to potential inflationary pressures and rising external uncertainties, we believe the risks to FY27E earnings expectations are tilted to the downside.
Automobile, metals and telecom to drive FY27 growth
JM Financial estimates earnings growth of 55% for automobiles, 36% for metals and mining, 32% for NBFCs, 44% for telecom and 19% for infrastructure companies.
Private banks will remain important to the earnings story. The sector accounts for over 31% in the Nifty 50 profit pool and is expected to generate around 13% earnings growth in FY27.
On the other hand, consumer companies, utilities and public sector banks are expected to see relatively modest growth in earnings.
Q4 earnings largely in line with estimates
This increase in JM Financial’s FY27 EPS estimates comes after Nifty 50 companies reported EPS growth of 4.4% year-on-year (YoY) in Q4 FY26, broadly matching expectations.
Among sectors, internet companies recorded the strongest earnings growth at 346%, followed by telecom at 38%, cement at 32%, consumer retail at 28%, utilities at 26% and automobile at 26%.
However, aviation was the weakest performing sector, with earnings down 174.6% from a year earlier.
Utilities, consumer and cement companies most beat earnings estimates during the quarter, while pharmaceuticals, oil and gas and internet companies missed estimates.
JM Financial urges caution
However, JM Financial has cautioned investors against assuming a sharp recovery despite the improved outlook due to continued lag in FY2026 expectations
The brokerage firm noted that Nifty 50 earnings The stock grew by just 4.5% per share in FY26, significantly lower than its earlier estimate of 12%. This trend mirrors FY25, when actual earnings growth was 3.4% against expectations of about 15%.
Many sectors miss FY26 expectations
JM Financial said the sharp difference between forecast and actual earnings growth in FY26 was not just due to changes in Nifty components.
Several key sectors performed below expectations. banks Profit growth was recorded at 3.6% against the expected 7.1%, while automobile companies saw a decline of 17.5% in profits against the expected growth of 4.9%.
Pharmaceutical companies reported a 9.7% decline in profits despite expectations for growth of about 19%, while consumer companies also fell short of estimates.
The earnings decline was most common among small-cap companies. About 33% of small-cap companies missed expectations during the quarter, compared to 29% of large-cap companies and 18% of mid-cap companies.
conclusion
JM Financial said the recent history of repeated earnings declines, coupled with the risks of higher crude prices, inflationary pressures and global uncertainties, calls for caution despite a strong earnings outlook for FY27.
