Have Indian Corporates Achieved Their Best Quarter in Two Years?
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Synopsis
Recent reports highlight that Indian companies have demonstrated remarkable earnings performance, marking their best quarter in two years. The financial sector plays a pivotal role in this recovery, with projections indicating a promising future for Indian equities. Explore how this turnaround could shape the economy moving forward.
Key Takeaways
- 69% of firms met or exceeded expectations.
- Sales increased by 6% year-on-year.
- Financials are the largest contributor to recovery.
- FY26 projected earnings growth at 10%, FY27 at 14%.
- Consumer goods and IT sectors showing signs of recovery.
New Delhi, Nov 24 (NationPress) Indian enterprises have reported their strongest quarter since September 2023, with recent findings suggesting that the streak of earnings downgrades may have come to an end, according to a report released on Monday.
A remarkable 69 percent of companies either surpassed or met projections, with total revenue witnessing a 6 percent increase year-on-year, stated the report from HSBC Global Investment Research, which further bolsters their stance on Indian equities.
With the support of reduced inflation, interest rate cuts, and moderation in income tax, the report projects a consensus of 10 percent earnings growth for FY26 and 14 percent for FY27.
The financial sector has been a significant driver of this rebound, as margins appear to have stabilized and early signs of a loan uptick are evident, the report elaborated.
In Q2 FY26, net profits surged by 13 percent year-on-year, while excluding commodities and one-off items, net income increased by 8 percent, marking the sixth consecutive quarter of modest growth.
Bank profits experienced a slight moderation due to net interest margin (NIM) pressures, yet credit costs declined, leading to positive surprises from major banks, which contributed to slight upward revisions in FY26 earnings.
Consumer goods companies faced challenges from GST disruptions, but many are now witnessing margin recoveries, while IT firms outperformed, aided by a weaker currency and are on the brink of demand recovery, the research firm noted.
Cement and paint companies have taken advantage of diminished competition within their sectors, while pharmaceutical sales remained robust, though hospitals have encountered margin pressures.
After a prolonged period of EPS downgrades, earnings forecasts for FY26 are now experiencing moderate upgrades, particularly in the oil and gas, real estate, technology, and financial sectors, the report said, asserting that “the worst is behind us.”
It pointed out consensus downgrades for certain consumer services, healthcare, and FMCG sectors. Management across various sectors, including banking, technology, consumer goods, cement, and automotive, have indicated a recovery in the forthcoming quarters, as noted.
Point of View
I believe this turnaround in Indian corporate earnings is both encouraging and significant. With key sectors showing recovery, it's essential for investors and stakeholders to remain informed about these developments. At NationPress, we prioritize bringing the most reliable news to our audience, ensuring that our coverage reflects the pulse of the nation.
NationPress
24/11/2025
Frequently Asked Questions
What does the report indicate about Indian companies' earnings?
The report indicates that Indian companies have achieved their best quarter in two years, with a significant percentage surpassing or meeting earnings expectations.
What sectors are contributing to the recovery?
The financial sector is the largest contributor, alongside IT, consumer goods, and infrastructure sectors, showing resilience and growth.
What are the projected earnings growth rates for FY26 and FY27?
The report projects a consensus estimate of 10 percent earnings growth for FY26 and 14 percent for FY27.
How have consumer goods firms performed?
Consumer goods firms faced challenges from GST disruptions but many are now recovering their margins.
What does the future look like for Indian equities?
The report supports an overweight on Indian equities, indicating a positive outlook backed by recent performance.
