India’s June 2025 quarter earnings season for Nifty 50 companies reveals stabilising trends, with 36 firms reporting results. Gains in Cement, BFSI, Technology, and Utilities sectors drove performance, while downgrades—though easing—continue to impact banking.
India’s corporate earnings for the June 2025 quarter (Q1 FY26) have reflected signs of normalisation across Nifty 50 companies, with 36 of the 50 constituents reporting results so far. These numbers paint a cautiously optimistic picture, supported by robust performances in the Cement, BFSI, Technology, and Utilities sectors.
Cement and BFSI Drive Performance
The overall earnings growth of 7.5% year-on-year was driven by five key sectors—cement, BFSI, oil & gas, utilities, and technology—accounting for 71% of the incremental YoY growth. Cement stood out with a staggering 47% growth in profits, attributed to strategic pricing actions and operating leverage gains.
HDFC Bank, ICICI Bank, and Bajaj Finance were among the leading contributors to Nifty’s earnings growth, alongside JSW Steel, L&T, M&M, and Reliance Industries.
Earnings Downgrades Ease But Are Far From Over
Despite better-than-expected results, earnings downgrades persisted, primarily in the banking sector, due to concerns over net interest margin (NIM) compression and asset quality pressures. Larger private banks saw earnings revisions downward, while non-banking financial companies showed stronger asset growth and profitability, albeit with cautious management outlooks.
The earnings downgrade ratio improved to 50%, a meaningful recovery from the 57% average across the past three quarters, indicating that corporate outlooks are beginning to stabilise.
EPS Estimates and Valuation Outlook
Nifty 50 EPS growth is now forecasted at approximately 10% for FY26, rebounding from the muted 1% growth in FY25. This acceleration is expected to be fuelled by a more favourable macro environment shaped by monetary and fiscal stimulus measures.
Despite this recovery, Nifty’s forward valuation remains slightly stretched. It currently trades at 22.1x FY26E earnings, compared to the long-period average (LPA) of 20.7x. Analysts have trimmed FY26 EPS estimates by 1.1% to ₹1,110 and FY27 estimates by 0.8% to ₹1,297, citing reductions in forecasts for Reliance Industries, HDFC Bank, Kotak Mahindra Bank, Power Grid Corporation, and Axis Bank.
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Sectoral and Market Strategy
Large-cap stocks continue to dominate institutional portfolios, but improving earnings visibility has increased the allocation to mid-caps. The mid-cap weight has risen from 16% to 22%, reflecting growing confidence in their earnings resilience.
Analysts remain overweight on sectors such as BFSI, Consumer Discretionary, Industrials, Healthcare, and Telecom, while being underweight on Oil & Gas, Real Estate, Cement, and Metals.
IT Sector Poised for Tactical Recovery
The IT sector, represented by companies like Infosys and HCL Tech, has also attracted attention due to its relatively attractive valuation. Despite single-digit EPS growth projections, strong free cash flows, and low institutional ownership suggest a tactical bounce may be underway, mirroring the recent recovery in the FMCG space.
India’s Q1 FY26 earnings season reflects a transitioning phase for corporate India. While downgrades are still present—particularly in banking—there’s a visible improvement in underlying earnings trends, sector leadership, and market sentiment. The macroeconomic backdrop, supported by policy tailwinds, may offer the needed catalyst for broader earnings recovery in the quarters ahead.
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