Nifty 50 Companies Set for Single-Digit Revenue and Profit Growth in December Quarter
The Nifty 50 companies are expected to report modest single-digit growth for the December quarter, maintaining the trend observed in recent times when exceptional gains are excluded. As per the latest estimates from ETIG:
– Projected Growth Rates:
– Revenue growth is anticipated at 7.4%
– Net profit growth may increase by 6.1%
For comparison, during the same quarter last year, these figures stood at 6.2% for revenue and 10% for net profit. This quarter’s profit figures are expected to be impacted by challenges faced by certain companies, notably Tata Motors PV, along with some pharmaceutical and IT firms.
Sector Insights Affecting Nifty 50 Growth
Gautam Duggad, head of institutional research at Motilal Oswal Financial Services, noted that earnings for covered companies may grow by 16% year-on-year, marking the highest growth rate in eight quarters. Excluding financial companies, the growth could accelerate to 19% due to anticipated pressures on net interest margins affecting overall performance.
Shweta Rajani, associate director at Anand Rathi Wealth, anticipates a recovery in corporate earnings after a relatively subdued performance in previous quarters, driven by:
– Policy support
– Strengthening domestic demand
– Increased government spending
Despite these expectations, the aggregate operating margin for the sample may contract by approximately 40 basis points year-on-year, landing at 21.3%. Nonetheless, it is projected to remain above 20% for the 13th consecutive quarter. Rajani expressed that expected improvements in operating margins are likely to be selective, underscoring the importance of tailored strategies across specific sectors rather than generalized optimism based on index performance.
Future Outlook for Indian Equity Markets
Looking ahead, Duggad believes that Indian equity markets are poised to experience favorable conditions, entering 2026 with several tailwinds including:
– Declining interest rates
– Easing liquidity
– GST rate cuts
– Reduction in personal tax
He projects a robust net profit growth rate of 12-15% annually for the period from FY25 to FY27, as earnings revision trends are showing marked improvement.
According to Rajani, the coming fiscal years indicate that FY26 will likely be characterized by consolidation, followed by a significant recovery in FY27. Predicted aggregate earnings growth rates are:
– 8% for Nifty 50
– 16% for mid-cap companies
– 10% for small-cap indices
The momentum could surge to 16% for Nifty 50 and 18-20% for mid- and small-cap sectors due to capital expenditure cycles, enhanced operating leverage, and stabilization in global demand.
Sector-Specific Performances Impacting Growth
– Automobiles: The festive season has facilitated double-digit sales growth across various segments. While most automotive companies are projected to show similar growth, Tata Motors PV may struggle due to pressures from its UK division.
– Banking and Finance: The net interest margins (NIM) of banks are expected to stabilize, though slight declines may occur due to a recent RBI rate cut. Public sector banks may exhibit stronger credit offtake compared to private counterparts.
– Capital Goods: Demand remains robust, particularly in defense and power sectors, with raw material prices posing challenges for margin expansion.
– Cement: After facing initial pressure in the quarter, cement sales volumes have shown improvement as execution activities ramp up. UltraTech is poised for double-digit growth.
– FMCG: Companies within this sector anticipate mid-to-high single-digit revenue and profit growth, bolstered by GST cuts and holiday shopping trends.
– IT Sector: A sustained delay in decision-making poses challenges, with potential flat or negative sequential growth in top-line performance expected.
– Metals: Steel prices have remained under pressure, but improvements are anticipated due to government anti-dumping measures.
– Pharma: Performance may be weak, particularly due to challenges faced in the U.S. market. However, a depreciating rupee could provide some margin support.
As we approach the end of the December quarter, the outlook for Nifty 50 companies remains cautiously optimistic, with sector-specific strategies crucial to navigating the complexities of the current economic landscape.