India Inc eyes 20-22% Q2 earnings growth as banks, autos and metals lead

Despite mounting geopolitical uncertainty and tighter global monetary conditions, India Inc is poised to deliver 20-22% year-on-year (YoY) earnings growth in Q2FY27, with banking and financial services, automobiles, metals and mining, and oil and gas expected to lead the gains, according to leading brokerage firms.“We expect 2QFY27 net profits of the Nifty-50 Index to increase 21% YoY,” Kotak Institutional Equities said in its quarterly preview. “We estimate the EPS (earnings per share) of the Nifty 50 Index at ₹1,227 for FY27 and ₹1,398 for FY28.”The earnings outlook reflects the resilience of the domestic economy, underpinned by sustained GDP growth, industrial production, GST collections and robust foreign exchange reserves. However, persistent foreign institutional investor (FII) outflows and subdued investor sentiment continue to weigh on equity markets.Motilal Oswal Financial Services Ltd expects aggregate corporate earnings for the September quarter to grow 22% year on year, marking the highest growth in 11 quarters.The projected growth comes against a challenging global backdrop. Uncertainty over the West Asia conflict, policy unpredictability in the US and persistent inflation have heightened concerns over supply chains, crude oil prices and input costs. Tighter monetary conditions could also raise borrowing costs for companies, potentially tempering investment and demand.Banks and financial services to leadBanking and financial services companies are expected to post strong earnings, supported by robust credit growth. YES Securities projects banks’ net interest income (NII) to grow 14.7% YoY, with small finance banks (SFBs) and non-banking financial companies (NBFCs) expected to register 21.2% growth. The banking sector is projected to grow 12.6%.Profit after tax (PAT) is expected to increase 22%, while pre-provision operating profit (PPoP), which measures operating earnings before provisions for potential loan losses, is projected to rise 16.8% YoY.Private banks are expected to report earnings growth of around 20%, while public sector banks could see largely flat earnings. Fresh loan slippages and net interest margins (NIMs) are expected to remain stable or decline marginally from the previous quarter. NIM measures the difference between interest income earned and interest paid, relative to interest-earning assets.Auto earnings to accelerateThe automobiles and components sector is expected to benefit from strong sales volumes, price increases and a favourable product mix. Kotak Institutional Equities projects automobile original equipment manufacturers (OEMs) to report 29% YoY revenue growth, supported by higher production of passenger vehicles, commercial vehicles and two-wheelers.Vehicle sales have remained robust, aided by resilient retail demand following GST cuts. Price increases and a shift towards higher-value models could further support revenue growth, although higher input costs remain a potential pressure on margins.IT sector stable, margins set to improveThe information technology sector is expected to remain broadly stable, with no significant deterioration in performance across most companies. YES Securities projects sequential revenue growth, measured in constant currency to exclude exchange-rate movements, to range from -0.2% to 2.1%.“Growth is increasingly supported by deal ramp-ups, vendor consolidation and cost-takeout engagements, while BFSI remains relatively resilient and early signs of recovery are emerging in select verticals,” YES Securities said in its quarterly preview.“Margins are expected to improve QoQ across all six companies, led by HCLTech and Wipro with +82 basis points each,” the report added.Pharma sector poised for steady growthThe pharmaceutical sector is also expected to deliver stable earnings, supported by domestic formulations, contract research, development and manufacturing organisations (CRDMOs), and improving export markets.According to Kotak Institutional Equities, TRP and CORONA are expected to report strong YoY sales growth, while MANKIND, EMCURE and ARBP are projected to post double-digit revenue growth.