India Equity Strategy: Cyclical tailwinds drive earnings beat; lingering geopolitical risks constrain consensus earnings upgrades

Research evidence excerpt

India Equity Strategy

Global Markets Research

18 August 2026

EQUITY: EQUITY STRATEGY

1QFY27 earnings review

Research Analysts

Cyclical tailwinds drive earnings beat; lingering geopolitical

risks constrain consensus earnings upgrades

Saion Mukherjee - NFASL

1QFY27 earnings: Cyclical support underpins resilience; lingering geopolitical risks

limit consensus earnings upgrades

Corporate earnings for 1QFY27 came in ahead of Street expectations. For Nifty 50

companies, year-on-year earnings growth was 4%, exceeding consensus estimates by 1%.

However, the headline growth figure is distorted by the impact of oil price movements and

one-off items (e.g., Reliance Industries [RELIANCE IN, Buy], ONGC [ONGC IN, Neutral]).

Excluding these effects, we estimate underlying earnings growth was in the low teens – a

more representative picture of corporate India's operating momentum, in our view.

India Strategy

Akshay Rajgarhia - NFASL

Growth for the broader market was materially stronger during the quarter. Our analysis

covers 256 companies in the BSE 200+ universe (BSE 200 plus Nomura coverage

stocks). PAT growth for this universe was 3% y-y, while normalised PAT (excluding

extraordinary items) grew 6% y-y – beating consensus estimates by 8% and 12%,

respectively.

The oil & gas sector was a significant drag, with losses booked by oil marketing

companies (OMCs) amounting to approximately 4% of the universe's aggregate profit

pool. Excluding oil & gas, normalised earnings growth was a healthy 20% y-y, surpassing

Bloomberg consensus estimates by 5%.

Banks and financials, metals, telecom, capital goods/defence, infrastructure, consumer

discretionary, staples (ex-ITC [ITC IN, Buy]), and healthcare services’ PAT growth was

strong, while PAT growth in IT services, pharmaceuticals, cement, and automobiles

(largely four-wheelers) was lower.

Financials and metals contributed almost entirely to the aggregate earnings beat.

Revenue growth at 17% (excluding oil & gas, metals, and financials) reached a 12-quarter

high, though this was offset by EBITDA margin compression of 122bp y-y. EBITDA

margins declined year-on-year for most commodity-consuming sectors.

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