Nifty 50 cos likely to see single-digit revenue and profit growth in December quarter

Mumbai: The Nifty 50 companies are expected to report single-digit year-on-year growth in aggregate revenue and net profit for the December quarter, in line with the trend in recent quarters after excluding exceptional gains. According to the latest ETIG estimates, revenue is expected to grow by 7.4% while net profit may rise by 6.1%. In the year-ago period, the growth was 6.2% and 10% in that order. The profit will be dragged down in the latest quarter by a handful of companies including Tata Motors PV, pharma and IT companies.

"We expect earnings of the companies under our coverage to grow 16% year-on-year (the highest in eight quarters)," said Gautam Duggad, institutional research head, Motilal Oswal Financial Services, adding that excluding financials, the earnings growth may accelerate to 19% as pressure on net interest margins of banks are expected to affect the overall performance of the sample.

Shweta Rajani, associate director, Anand Rathi Wealth, expects corporate earnings to improve in the third quarter of the current fiscal year following relatively muted growth in the previous quarter. "The recovery is likely to be driven by a combination of policy support, improving domestic demand, and higher government spending," she said.


The operating margin of the sample may contract by around 40 basis points year-on-year to 21.3%. It is, however, likely to remain above 20% for the 13th consecutive quarter. "Operating margins in the third quarter are expected to be selectively supportive rather than broad-based, reinforcing the need for sector-specific positioning rather than index-level optimism," said Rajani.

Duggad believes that Indian equity markets are entering 2026 with more tailwinds including falling interest rates, easing liquidity, GST rate cuts and personal tax reduction. "We expect a 12-15% net profit growth annually over FY25-27 for companies under our coverage," mentioned Duggad citing that earnings revision trajectory has distinctly improved.

According to Rajani, the earnings trajectory across segments indicates that FY26 is likely to be a year of consolidation, followed by a meaningful recovery in FY27. "Aggregate earnings growth for FY26 is expected at 8% for the Nifty 50, 16% for mid-cap 150, and 10% for the small-cap index," she said, adding that the growth rate may accelerate to 16% for Nifty 50 and 18-20% for mid- and small-caps driven by capex cycle momentum, improving operating leverage, and stabilisation in global demand conditions.

Automobiles
Festive season helped automobile companies post double-digit sales volume growth across passenger vehicles, commercial vehicles and tractors segments. Barring Tata Motors PV, other auto companies are likely to report double-digit year-on-year revenue and profit growth for the December quarter. The performance of Tata Motors PV is likely to be affected by pressure from the UK division.

Banking and finance
Net interest margins (NIM) of banks are expected to bottom out in the December quarter though they may fail marginally due to fresh rate cut by the RBI recently. Credit costs will likely be benign amid lower slippages and improving asset quality in the unsecured segment. Public sector banks may show higher credit offtake than the private sector counterparts for the quarter.

Capital Goods
Demand from government spending remained strong driven by the defence and the power sectors while the momentum is likely to improve for the railway segment. Prices of raw materials inched up during the quarter, which may limit margin expansion. L&T is expected to report double-digit revenue and net profit growth for the quarter.

Cement
Cement prices were under pressure in the first half of the quarter amid reduced GST rate, extended monsoon and slower execution due to festive season. The sales volume showed an uptick in the second half led by improving execution. UltraTech is expected to report double-digit year-on-year revenue and net profit growth.

FMCG
Companies in the fast-moving consumer goods (FMCG) sector are expected to report mid-to-high single digit revenue and profit growth for the third quarter, aided by GST rate cuts and festive momentum. The fourth quarter demand trend will be crucial to determine whether the effect of rate cuts continues to drive sales momentum.

IT
Amid holidays and sustained delay in decision-making, the top-line growth of the IT companies is likely to remain under pressure with sequential growth either negative or around 1%. The operating margin improvement may remain flatto-negative based on the salary increment cycle. The management commentary on the adaptability of artificial intelligence (AI) solutions will be important.

METALS
Hot-rolled cold (HRC) steel prices remained under pressure in the first two months of the December quarter and showed improvement towards the end aided by anti-dumping measures from the government. The average aluminium prices rose by around 10% globally year-onyear during the quarter amid smelter capacity cap in China. Metal companies are expected to report either high single-digit or low double-digit growth in revenue and profit for the quarter.

PHARMA
The Nifty pharma companies may report weak numbers given pressure in the US business amid patent expiry of Revlimid. However, a depreciating rupee and benign costs of intermediates may offer some support to margins. The domestic formulations business is expected to improve further.