Dear Reader,Every earnings season eventually runs its course, but this one deserves a proper send-off. The 1QFY27 earnings season closed on a strong note, with broad-based growth across key sectors and companies delivering a healthy mix of earnings beats, upgrades and improving demand.
Financials, metals, oil & gas excluding oil marketing companies, and autos were among the key engines of growth, while chemicals, textiles and real estate also added to the breadth of the season. Oil marketing companies, as expected, remained a significant drag on the overall picture.
A broad-based beat, led by a handful of familiar namesThe numbers from Motilal Oswal Financial Services underline just how strong the season was. In its coverage universe, excluding oil marketing companies, sales, EBITDA and profit grew 18%, 15% and 22% year-on-year, respectively, comfortably ahead of its estimates of 15%, 10% and 15%.
The Nifty told an even sharper story, delivering 18% profit growth against an estimate of just 10%, its best showing in ten quarters. Five names, ONGC, Hindalco, Reliance Industries, JSW Steelm and Bharti Airtel, accounted for 60% of the incremental earnings growth on their own.
At the other end were InterGlobe Aviation, ITC, Dr Reddy's Laboratories, Tata Motors Passenger Vehicles and Cipla, which emerged as the clearest drags. Oil marketing companies were another major weak spot, swinging to a combined loss of ₹181 billion from a profit of ₹162 billion a year earlier.
The smaller the company, the bigger the surpriseWhat stood out this season wasn't just large-caps holding up. It was how much further down the market-cap curve the strength travelled. Large-caps in Motilal Oswal's universe delivered 21% earnings growth, in line with the broader universe and ahead of the brokerage's 14% estimate.
Mid-caps did even better, with earnings rising 23%, an eleven-quarter high, while small-caps went further still, growing 31%, helped by a favourable base and led largely by financials and oil & gas. The broader beat-miss picture was favourable too. 48% of companies in Motilal Oswal's universe beat estimates at the PAT level, against 25% that missed.
Among large-caps, the beat ratio was even stronger at 57%. The brokerage also raised its Nifty FY27 earnings-per-share estimate by 0.6% to ₹1,232, largely on the back of upgrades to Reliance Industries, Hindalco, ONGC, ICICI Bank and SBI. What the Street is making of it allVinod Nair, Head of Research at Geojit Investments, struck a note of cautious optimism, pointing out that stronger-than-expected earnings, driven by a mix of pricing actions and volume growth, should support further upgrades in the quarters ahead.
There is a caveat, however. Nair flagged that the low-cost inventory that helped margins this quarter may not be repeated once companies replenish stock at higher costs. Raamdeo Agrawal, Chairman and Co-founder of Motilal Oswal Financial Services, was considerably more bullish, describing the quarter as the start of a multi-year earnings acceleration rather than a one-off improvement.
He expects Nifty EPS to climb to between ₹1,425 and ₹1,450 next year, projecting 12-14% annual growth over the next four to five years. He credited the GST cut from 28% to 18%, alongside a sharp increase in credit growth from single digits to 17-18%, as structural drivers behind the acceleration.
He also pointed to autos, data centres, power and quick commerce as sectors already showing the benefit, with quick commerce, in particular, expected to continue growing at more than 40-50% annually. FMCG finally found its pricing powerAnand Rathi's sector read on FMCG rounded out the picture.
Revenue growth for the space accelerated to 15.1% year-on-year from 10.7% in the previous quarter, while paints did even better, with growth rising to 14.2% from 7.6%. The recovery was relatively well balanced, combining mid-to-high single-digit volume growth with calibrated price hikes, aided by the GST cut, improving sentiment and continued premiumisation.
Companies were also selective about where they raised prices. Larger packs and premium products absorbed most of the increases, while entry-level price points remained largely protected, a strategy aimed at keeping rural and price-sensitive demand intact.
With crude oil prices easing below $100 a barrel, the brokerage expects margins across FMCG, paints, alcobev and QSRs to look even better in the second half. That's the season, wrapped up. We'll be back the next time the numbers demand it. Until then, keep exploring the rest of what CNBC-TV18 has to offer.
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