Within the MOFSL universe, midcap companies posted a 29% year-on-year earnings growth, ahead of the brokerage’s estimate of 22%. In comparison, large-cap companies reported earnings growth of 14% year-on-year, broadly in line with the overall universe, while smallcaps delivered a 30% rise in earnings, slightly below the estimate of 33%.
The brokerage said sectors such as BFSI, technology, utilities, real estate and oil & gas drove the strong performance in the midcap segment, contributing nearly 87% of the incremental year-on-year earnings accretion. Cement and Telecom, however, remained the key laggards within the segment. Execution also remained healthy across the midcap space, with 84% of the companies under MOFSL’s coverage either meeting or exceeding estimates. This compares with 76% for largecaps and 70% for smallcaps.
Within the smallcap universe, sectors including chemicals, cement, capital goods, technology and non-lending NBFC weighed on overall performance. On the other hand, NBFC lending, private banks, automobiles, healthcare and retail posted strong earnings growth and together contributed around 129% of the incremental earnings accretion.
Among Nifty companies, 28 firms have declared results so far, posting aggregate earnings growth of 7% year-on-year, slightly ahead of MOFSL’s estimate of 6%. Excluding Reliance Industries, which reported a 13% decline in profit, the Nifty universe recorded earnings growth of 11%.
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The brokerage said earnings growth within the Nifty was largely driven by HDFC Bank, Infosys, TCS, M&M and Coal India, which together contributed 73% to the incremental year-on-year earnings growth. Meanwhile, Reliance Industries, Maruti, Wipro, Axis Bank and Jio Financial Services weighed on overall Nifty earnings. So far, seven Nifty companies have reported lower-than-expected profits, nine posted earnings beats and 12 delivered in-line results.
Sectoral snapshot
Banks reported broadly stable and in-line net interest margin performance during the quarter, although PSU banks saw slightly weaker-than-expected NII and NIM trends. Loan growth remained robust, while credit-deposit ratios moderated marginally.
NBFC lenders delivered a strong quarter, aided by healthy disbursements, strong AUM growth following GST rate cuts and improvement in asset quality. Consumer companies also witnessed stable demand trends, supported by benign inflation, improving rural sentiment and higher affordability after GST rate rationalisation.
Within metals, Jindal Stainless reported a slight beat due to better volumes and NSR, while Hindustan Zinc delivered a strong earnings beat led by higher silver revenues. Vedanta’s performance remained in line on the back of improved LME prices, better volumes and forex gains. Nalco reported in-line revenue growth, although cost inflation affected EBITDA performance.
The Oil & Gas segment remained weak overall, primarily dragged by Reliance Industries due to weaker profitability in its energy business. Petronet LNG, however, delivered a strong beat driven by robust volumes.
In the technology sector, IT services companies reported a median quarter-on-quarter constant-currency revenue growth of 1%. MOFSL said largecap IT companies could face increasing growth pressure in FY27 as deflationary trends continue to build.
Overall, the brokerage said Q4FY26 earnings have remained broadly in line with expectations, with around 50% of companies under its coverage exceeding estimates at the PAT level, while 24% reported misses.
What’s ahead
India’s sharp underperformance in FY26 and record FII outflows mean that Indian equities may now have a favourable base, analysts said. However, it cautioned that markets could remain volatile in the near term due to developments linked to the West Asian crisis. The brokerage also flagged elevated commodity prices as a key monitorable, warning that sustained high levels could impact India’s macroeconomic parameters and monetary policy outlook.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)