India's Q2 Corporate Earnings Surge 14%, Midcaps Outshine
India's corporate sector showed robust performance in Q2 with 14% YoY earnings growth. Oil & Gas, technology, cement, capital goods, and metals sectors drove 86% of total growth. Oil Marketing Companies saw a nine-fold profit increase. Among 27 Nifty companies reporting, overall growth was 5%, with HDFC Bank, Reliance Industries, TCS, JSW Steel, and Infosys contributing 122% of incremental growth. Midcap companies outperformed with 26% profit growth, compared to 13% for large-caps and 3% for small-caps. EBITDA margins expanded by 170 bps to 16%. Nifty is trading at 21.40 times FY26 earnings, close to its long-term average.
*this image is generated using AI for illustrative purposes only.
India's corporate landscape witnessed a robust performance in the September quarter, with earnings growing 14% year-on-year. The growth was primarily driven by key sectors, showcasing the resilience and dynamism of the Indian economy.
Sector-wise Performance
The Oil & Gas, technology, cement, capital goods, and metals sectors emerged as the primary growth drivers, contributing a substantial 86% of the total earnings growth. Notably, Oil Marketing Companies experienced a remarkable nine-fold increase in profits compared to the same period last year.
Nifty Companies' Performance
Among the 27 Nifty companies that have reported their earnings, the overall growth stood at 5%. The top contributors to this growth were:
| Company | Contribution to Growth |
|---|---|
| HDFC Bank | |
| Reliance Industries | |
| TCS | 122% (combined) |
| JSW Steel | |
| Infosys |
These five companies collectively accounted for 122% of the incremental growth in the Nifty index.
Market Cap Segment Analysis
The performance across different market capitalization segments showed interesting trends:
| Segment | Profit Growth |
|---|---|
| Midcap | 26.00% |
| Large-cap | 13.00% |
| Smallcap | 3.00% |
Midcap companies significantly outperformed their larger and smaller counterparts, marking their fourth consecutive quarter of superior performance.
Financial Metrics
Despite cost pressures, companies managed to improve their profitability:
- EBITDA margins expanded by 170 basis points, reaching 16.00%
- Motilal Oswal marginally upgraded Nifty EPS estimates:
- FY26: Rs 1,101.00
- FY27: Rs 1,278.00
Market Valuation
The Nifty index is currently trading at 21.40 times its FY26 earnings, which is close to its long-term average. This valuation suggests a balanced market sentiment, neither overly optimistic nor pessimistic.
The strong performance of midcap companies, coupled with the resilience shown by key sectors, indicates a broad-based recovery in the Indian corporate sector. However, investors should remain cautious and consider the sustainability of this growth trajectory in light of global economic conditions and domestic challenges.
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