India’s corporate earnings for the third quarter of FY25 showed a continuation of low single-digit growth, marking the third consecutive quarter of modest performance. The banking and financial sector (BFSI) played a key role in supporting overall earnings, while sectors like technology, telecom, healthcare, capital goods, and real estate also contributed positively.
Nifty-50: Modest Growth for the Third Straight Quarter
The Nifty-50 recorded a 5% year-on-year (YoY) profit after tax (PAT) growth, aligning with market expectations. This marks the third consecutive quarter of single-digit earnings growth, highlighting the subdued momentum in corporate profits.
Performance by Market Segments: Mid-Caps Outperform, Small-Caps Struggle
Large-Cap Companies: A group of 84 large-cap firms reported a 5% YoY earnings growth, which was in line with analyst estimates.
Mid-Cap Companies: The 87 mid-cap firms under coverage delivered an impressive 26% earnings growth, significantly surpassing the estimated 17% growth. This strong performance was fueled by financial stocks, especially PSU banks and NBFCs, along with companies in metals, oil & gas, and retail sectors.
Small-Cap Companies: The 121 small-cap firms faced broad-based pressure, with earnings falling 24% YoY, much worse than the estimated 5% decline. Over half (56%) of the small-cap companies in the study failed to meet earnings expectations.
Nifty EPS Estimates Revised Downward
Analysts have lowered their earnings per share (EPS) estimates for the coming years due to downgrades in key companies:
FY26 EPS estimate: Cut by 1.4% to INR 1,203, primarily due to weaker projections for ONGC, HDFC Bank, JSW Steel, Axis Bank, and SBI.
FY27 EPS estimate: Reduced by 1.8% to INR 1,373 (earlier INR 1,398), with downgrades in SBI, HDFC Bank, ONGC, Tata Steel, and Reliance Industries.
Major Earnings Upgrades for FY26
Some companies received positive earnings revisions, led by telecom, auto, and metal stocks:
Bharti Airtel: +9.2%
Hindalco: +4.2%
Tata Motors: +4.1%
Kotak Mahindra Bank: +3.6%
Maruti Suzuki: +3.5%
Major Earnings Downgrades for FY26
On the downside, steel, consumer goods, and healthcare stocks saw earnings cuts:
JSW Steel: -9.5%
Tata Consumer: -6.5%
Tata Steel: -5.9%
Trent: -5.5%
Dr. Reddy’s Labs: -5.0%
Conclusion: A Mixed Picture for India’s Earnings
While mid-cap companies outperformed expectations, large caps remained stable, and small caps struggled significantly. The Nifty-50’s muted profit growth and EPS downgrades for FY26 and FY27 indicate that corporate earnings may take longer to gain momentum. However, select companies in telecom, auto, and metals continue to see positive earnings revisions, suggesting sectoral strength despite overall sluggishness.
