India Inc’s Strongest Quarterly Earnings in 3 Years

India Inc concluded its 1QFY27 earnings season on a remarkably strong note, achieving its best quarter in nearly three years with broad-based growth across various sectors. This significant performance was primarily driven by financials, metals, oil and gas (excluding OMCs), and autos.

However, oil marketing companies presented a notable drag, reporting a combined loss of ₹181 billion during the quarter. Despite this, the overall corporate earnings landscape showed considerable resilience and expansion.

Key Earnings Metrics Exceed Expectations

• Motilal Oswal Financial Services reported sales growth of 18% year-on-year in their coverage universe (excluding OMCs).
• EBITDA increased by 15% year-on-year, surpassing estimates.
• Profit saw a substantial rise of 22% year-on-year, also exceeding analyst projections.

The Nifty 50 demonstrated an impressive 18% profit growth, marking its highest in ten quarters. Five companies alone—ONGC, Hindalco, Reliance Industries, JSW Steel, and Bharti Airtel—accounted for 60% of the incremental earnings.

Strength extended beyond large-caps, with mid-caps achieving 23% earnings growth, an eleven-quarter high, and small-caps growing by 31%. This robust expansion was largely supported by the financials and oil & gas sectors.

Analyst Outlook and Sector Performance

A favorable beat-miss ratio was observed, as 48% of companies in Motilal Oswal’s universe beat PAT estimates, and 57% of large-caps did so. Consequently, the brokerage raised its Nifty FY27 earnings-per-share estimate to ₹1,232.

Vinod Nair of Geojit Investments expressed cautious optimism, anticipating further upgrades but also warning of potential margin pressures from higher inventory costs. Conversely, Raamdeo Agrawal of Motilal Oswal Financial Services was highly bullish, viewing the quarter as the beginning of a multi-year earnings acceleration.

• Raamdeo Agrawal projects 12-14% annual Nifty EPS growth over the next four to five years.
• This long-term growth is attributed to GST cuts and increased credit growth.

FMCG Sector Rebounds Strongly

The Fast-Moving Consumer Goods (FMCG) sector also showed significant improvement, with revenue growth accelerating to 15.1% year-on-year. The paints sector similarly grew by 14.2% in revenue.

This recovery in FMCG was balanced, combining volume growth with strategic price hikes. Contributing factors included GST reductions, improved sentiment, and premiumisation efforts by companies. Firms selectively raised prices on larger and premium products while protecting entry-level price points to maintain rural and price-sensitive demand.

Looking ahead, easing crude oil prices, specifically below $100 a barrel, are expected to further boost margins across FMCG, paints, alcobev, and QSRs in the latter half of the year, signaling continued positive momentum.