Financials, metals, and OMCs drive earnings growth as Corporate India closes FY26 on a strong note

Corporate India wrapped up FY26 on a strong note, with robust earnings growth in the March quarter driven by financials, metals, and oil marketing companies (OMCs), according to a report by Motilal Oswal Financial Services Ltd (MOFSL).

The aggregate profit after tax (PAT) of 359 companies covered under the brokerage's universe grew 16% year-on-year in the fourth quarter of FY26, significantly higher than the estimated 8% growth. "The strong performance was led by financials, metals, and OMCs while technology, telecom, and automobiles also contributed meaningfully to earnings growth," the report said.

Sales and EBITDA for the MOFSL universe rose 12% each during the quarter, while profit before tax increased 11% year-on-year.

Among sectors, financials delivered 18% profit growth against an estimated 11% rise. Metals recorded a 50% increase in profits, substantially ahead of the projected 24% growth while OMCs posted a 62% jump in earnings compared with an estimate of 7%.

Technology companies reported 13% profit growth, telecom profits expanded 8.4 times year-on-year, and automobile companies clocked a 13% rise in earnings despite expectations of a decline.

Mid-caps lead earnings expansion

The report showed that earnings growth was broad-based across sectors, with "10 sectors reporting profits above expectations" and a favourable beat-to-miss ratio indicating widespread corporate strength.

Mid-cap companies emerged as the strongest performers during the quarter, with earnings growing 36% year-on-year against expectations of 25%. Large-cap earnings rose 12% while small-cap profits increased 19%, largely in line with estimates.

According to the report, financials, metals, OMCs, and healthcare together accounted for nearly 89% of the incremental profit accretion within the mid-cap universe.

The Nifty-50, however, remained in a phase of subdued earnings growth. The index reported 4% year-on-year PAT growth during the quarter, marginally ahead of estimates of 2%. "This marks the eighth consecutive quarter of single-digit earnings growth for the index," the report noted.

Bharti Airtel, JSW Steel, HDFC Bank, Infosys, and TCS contributed nearly 75% of the incremental earnings growth within the Nifty.

For the full year, the MOFSL universe delivered 15.1% earnings growth, with mid-cap profits rising 31.1%, compared with 13.1% for large-caps and 11.4% for small-caps.

Looking ahead, MOFSL expects its coverage universe to deliver around 10% growth in sales, EBITDA, and PAT during FY27. Financials, metals, telecom, and technology are projected to be the key earnings drivers and are expected to contribute 91% of incremental profit growth.

Despite the strong quarterly showing, the brokerage said forward earnings revisions remain under pressure, with FY27 earnings estimates for the MOFSL universe cut by 1.3%. It added that investors would continue to track geopolitical developments and commodity price movements closely, warning that "elevated commodity prices remain a key risk factor" for India's macroeconomic and monetary policy outlook.