Q2 earnings preview: Nifty50 profit growth likely to jump 27% in Q2FY27, strongest in 17 quarters: Motilal Oswal

Nifty50 aggregate earnings are expected to grow 27% year-on-year (YoY) in the second quarter of FY27 (2QFY27), marking the highest growth in 17 quarters, according to the latest India Strategy Q2FY27 preview by Motilal Oswal Financial Services.

The domestic brokerage expects broad-based earnings growth during the quarter, with aggregate earnings for the 399 companies in its universe projected to rise 22% YoY-the highest growth in 11 quarters.

Excluding oil marketing companies (OMCs), earnings are expected to grow 24%, the highest in 12 quarters, the report noted.

Financials, metals and telecom to drive earnings

Earnings growth is expected to be led by financials, with private banks, PSU banks and NBFCs projected to report profit growth of 24%, 27% and 24%, respectively. Metals are expected to post 44% earnings growth, while oil and gas earnings excluding OMCs are projected to rise 34%, the report noted.

Telecom is expected to record a 71% jump in profit, driven by Bharti Airtel. Other sectors expected to report strong earnings growth include cement at 35%, retail at 22%, consumer durables at 20%, defence at 13%, electronics manufacturing services (EMS) at 34% and technology at 13%.

“For the first time in several years, almost all MOFSL Universe sectors are expected to deliver earnings growth,” the report said.

Among other key sectors, automobile excluding TMPV is expected to report 4% earnings growth, while consumer, capital goods, healthcare, logistics, real estate and utilities are expected to post growth of 5%, 9%, 8%, 8%, 3% and 8%, respectively.

Sales, EBITDA growth to remain robust

The MOFSL universe is expected to report 19% YoY growth in sales, the highest in 16 quarters, while EBITDA is projected to rise 17%, the highest in 12 quarters.

For the Nifty50, sales and EBITDA are expected to grow 17% and 19%, respectively.

The large-, mid- and small-cap universes are expected to post profit growth of 23%, 11% and 29%, respectively. Sales are projected to grow 19%, 20% and 17%, while EBITDA growth is expected at 18%, 9% and 16%, respectively.

However, the brokerage expects the EBITDA margin excluding financials for the MOFSL universe to decline 50 basis points YoY, though it is projected to improve 140 basis points sequentially, to 17%. For the Nifty-50, the EBITDA margin is expected to remain flat YoY at 20.2%, while declining 30 basis points QoQ.

Over a two-year period, sales, EBITDA and PAT for the MOFSL universe are expected to post a compound annual growth rate of 14%, 14% and 17%, respectively, between 2QFY25 and 2QFY27.

Looking ahead, MOFSL expects the universe to report 15% and 17% earnings growth in FY27 and FY28, respectively. Nifty-50 earnings are projected to grow 17% in FY27 and 13% in FY28.

The brokerage has retained its FY27 Nifty earnings-per-share estimate but cut its FY28 estimate by 1.3%. It expects Nifty EPS to grow 16% and 14% to ₹1,233 and ₹1,406, respectively.