The numbers therefore did not reflect the challenges at the operating level such as rising input cost pressure, which squeezed operating profitability. For FY27, while the government’s focus on infrastructure and GST-driven demand push are key positives, the major risks are commodity inflation, weaker rupee and geopolitical uncertainties.
For a common sample of 2,956 companies that declared numbers in each of the past 13 quarters, aggregate net profit grew by 25.3% year-on-year, the highest in at least nine quarters.
Revenue growth at 10.8% remained in low double digits for the second straight quarter.
In the year-ago quarter, revenue and net profit grew by 7.2% and 15.2%, respectively.
“The March 2026 quarter has been encouraging, with corporate earnings coming in ahead of street expectations,” said Shweta Rajani, associate director, Anand Rathi Wealth.
She added that 54% of companies that declared results delivered positive earnings surprises, up from 46% in the previous quarter.
While earnings growth was upbeat, it did not reflect in operating margin, which contracted by 170 basis points year-on-year to 17.5%, the lowest in 12 quarters. “Higher commodity costs during the quarter increased input expenses across sectors, putting pressure on profitability,” Rajani said.
She expects some of the pressure to continue into the April-June quarter, keeping margins under watch.
Metal Cos Spring a Surprise
A big earnings surprise in the Nifty 50 index was from the metals sector, where profit doubled, helped by a one-off gain reported by JSW Steel, said Utsav Verma, research head, Choice Institutional Equities. Similarly, the power sector reported 29% earnings growth, helped by the deferred tax reversal of NTPC.
On the flip side, the logistics and transportation sector reported losses, dragged down by net losses at InterGlobe Aviation (IndiGo) due to higher fuel costs and a reduction in flights due to the Gulf war.
For FY27, while overall earnings growth is expected to be in double digits compared with a single-digit increase in the previous year, the performance is expected to be sector-specific. Rajani maintains a positive outlook. “While commodity inflation and global uncertainties pose risks, the combination of strong economic growth, policy support and an improving earnings cycle provides a positive foundation for FY27,” she said. She expects Nifty earnings to grow by 12% in FY27 from 3% in FY26
Verma expects commodity driven companies to perform well. “Majority of the upgrades in earnings for Nifty 50 companies has been observed across energy and metals sectors, driven by the buoyancy in commodity cycle,” he said, adding that consumer and manufacturing sectors are likely to have a challenging year due to a probable margin squeeze on account of the inability to pass on incremental input costs. He expects Nifty earnings to grow 15.2% in FY27.