Q2 spoiler alert: Over 50 companies staring at double-digit profit slump could hit your portfolio

India Inc’s second-quarter earnings season could bring a mixed bag of results, with as many as 53 listed companies expected to post a double-digit decline in net profit compared with last year, according to estimates by Motilal Oswal Financial Services (MOFSL). Some of the biggest names in automobiles, metals, and banking are likely to drag overall earnings growth.

For instance, Tata Motors is expected to report a 31% year-on-year fall in profit, while Axis Bank’s earnings may dip 20%, led by margin compression and higher provisions. Among industrial names, ABB India and Thermax are estimated to record around a 10% drop, and Bharat Forge may see a 13% decline in profits, reflecting weak order inflows and muted exports.

In the materials space, Hindalco’s profit is expected to fall 15%, while Deepak Nitrite could see a sharper 41% contraction due to lower realisations and inventory losses. Amara Raja is also likely to see profits fall 14%, while Samvardhana Motherson, Sona BLW, and Zen Technologies could report declines between 11% and 39%, dragged by global demand weakness and margin pressures.

Modest overall earnings outlook:

Despite these individual slowdowns, Motilal Oswal expects the overall market earnings picture to remain stable, supported by strength in select sectors. It estimates Nifty 50 earnings to rise 6% year-on-year in Q2FY26, while earnings for the broader Motilal Oswal Universe are likely to grow 9%.

The brokerage expects earnings to be anchored by Oil & Gas (up 25%), NBFC-Lending (up 21%), Telecom (returning to profit), Metals (up 10%), Technology (up 6%), Cement (up 62%), Capital Goods (up 14%), and Healthcare (up 10%). Together, these sectors are expected to contribute nearly 95% of the incremental earnings growth this quarter.

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However, financials could remain a drag -- private banks and public sector banks are both expected to report around a 7% decline in profits, as margin pressure continues and credit growth moderates. Motilal Oswal has trimmed its FY26 Nifty earnings per share (EPS) estimate by 1.1% and now expects Nifty EPS to grow 8% this year and 16% in FY27.

Echoing similar caution, Nuvama Institutional Equities expects Q2 revenue growth to stay soft at 6% year-on-year, marking the tenth straight quarter of sub-10% top-line growth. Excluding oil marketing companies, the brokerage noted that the recovery in corporate earnings remains "elusive".

Nuvama forecasts Nifty EPS growth of 8% for the quarter and warns of potential downgrades for FY27, citing risks from global trade disruptions and tighter US fiscal conditions. "While GST cuts may spur domestic consumption, they are unlikely to fully offset external headwinds," the brokerage said in its preview note.

Should investors worry?

Market sentiment in the Q2 earnings season remains cautious but selectively optimistic. Vikram Kasat, Head of Advisory at PL Capital, said, "We expect near-term moves to be largely stock-specific, with potential positive momentum in quality financials and large-cap IT."

Meanwhile, Siddhartha Khemka, Head of Research (Wealth Management) at Motilal Oswal, believes that the consolidation phase in equities may soon give way to renewed momentum. "After a year-long consolidation, Indian markets are poised to regain strength by the end of 2025," he said.

Overall, while Q2 earnings growth may appear modest and uneven, analysts expect market resilience to continue, backed by solid fundamentals in select sectors such as financials, capital goods, and technology.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)