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Informist, Tuesday, Aug. 18, 2026

 

MUMBAI – With the earnings of companies for the first quarter of financial year 2026-27 (Apr-Mar) over, Kotak Securities Ltd. now expects the net profit of Nifty 50 constituents to grow 18% in FY27 to INR 10 trillion and 14% in FY28. Growth will be broad-based across sectors and the risks of large downgrades are less likely, the brokerage said.

 

Around 40% of the net profits of the Nifty 50 companies come from global commodities, global products and global services sectors, 8% from electric utilities and telecom, one-third from financials, and the remaining 20% of profits comes from domestic consumption and investment sectors. The low base in the case of several companies is also likely to support growth, the broking firm said in a report.

 

However, some sectors will we weaker than others. Margins of players in the automobiles, consumer discretionary and consumer staples sectors will likely be lower. Further, weak sentiment in the information technology space along with a fall in affordability is expected to impact the residential real estate sector negatively, Kotak Securities said.

 

FINANCIALS

Banking majors' net profits are estimated to grow 8.5% in FY27 while those of non-banking financial companies' are likely to increase 31% on year. Banks' net profits had climbed 6.1% on year for FY26, according to the report. Higher credit growth, a marginal decline in lenders' net interest margins, and steady operating leverage and credit costs are seen helping the sector this financial year. 

 

On the net interest margins front, the competitive pricing environment in secured retail segments of automobile and housing loans may have an adverse impact. Any potential benefits of higher interest rates from a possible increase in policy rates has not been factored in. The growth in loans of ICICI Bank is strong and its margins are stable while HDFC Bank Ltd. and Axis Bank Ltd. face uneven growth and net interest margin pressures.

 

For non-banking financial companies, strong loan growth, largely stable margins at the sector level, and a moderate decline in credit costs are expected to lead growth. 

 

AUTOMOBILES

The net profits of Nifty 50 companies in the automobile and automobile components are likely to grow 20% in FY27. They had fallen 14% in the previous fiscal year. The demand for two-wheelers and four-wheelers in India is pegged to be robust during the first half of FY27 but moderate a tad in the latter half. The domestic two-wheeler industry is seen growing 7.4% in FY27 and the domestic car industry around 7.6% on year.

 

However, multiple risks persist for the profit estimate for this sector. Elevated raw material costs, higher cost of ownership on higher diesel and petrol prices, and lower volumes due to price hikes could play out negatively for Indian automobile majors. If companies resort to increasing discounts, profitability is likely to take a hit, according to the report.

 

For Tata Motors Passenger Vehicles Ltd. specifically, recovery in its subsidiary Jaguar Land Rover Automotive PLC will be the most important factor to watch. Weaker demand for Jaguar Land Rover from China amid weak macroeconomic conditions may also drag down the sector's profitability.

 

INFORMATION TECHNOLOGY

The net profit of companies operating the information technology space is estimated to increase 6.9% this financial year and 5.3% in the next one. However, the profit depends upon a host of factors and not all of them favourable. The change in revenues in constant currency terms and margins will likely be negative for technology giants. These companies, however, may be able to reap some benefits of currency depreciation due to war-linked volatilities.

 

Headwinds to revenue growth are likely to persist in medium term, Kotak Securities said. Competition in the sector is high, the brokerage noted, and pass-through of benefits from better productivity due to artificial intelligence could drag down companies' margins. "The demand environment remains challenging with customers of IT services companies (1) postponing their spending decisions," the brokerage said. 

 

OIL AND GAS COMPANIES

This sector see-sawed the most due to the ongoing war in West Asia and the net profit of the Nifty 50 majors in this universe are expected to rise 32% in FY27. The net profit of Oil and Natural Gas Corp. is expected to surge 59% on year, driven by higher net realisations in crude oil and natural gas. 

 

The net profit of Nifty 50 heavyweight Reliance Industries is expected to grow 26% in FY27, led by growth in refining margins, profit in the retailing and telecommunications segment from higher tariffs. Higher average revenue per user in its key wireless segment is also expected to support growth.  

 

 

PHARMACEUTICALS

Profit of Nifty 50 pharmaceutical majors are expected to contract 3% in FY27. They had earlier declined 6.1% on year in FY26, according to Kotak Securities' report. Revenues from sales of generic drugs in the US are expected to recover marginally. Sales of Cipla Ltd. are expected to get a boost from generic Advair, generic Ventolin, and inhalers. While its specialty portfolio will be the key growth lever for Sun Pharmaceutical Industries Ltd., acquisition costs for Organon & Co. and a weaker rupee may drag down growth. Dr. Reddy's Laboratories Ltd. will continue to face pressure due to fewer approvals for significant abbreviated new drug applications and high competition, the brokerage said. 

 

METALS AND MINING

Higher steel profitability, supported by safeguard duties on steel imports through FY29, strong growth in steel volumes, and high aluminum prices are expected to drive the net profit of companies in the metals and mining sector. The profits of these companies are seen increasing 42% in FY27.

 

The avergae price of aluminium on the London Metal Exchange is expected to be $3,250 per tonne in FY27 and that of zinc is likely to be $3,300 per tonne. 

 

As for other sectors, the net profits of players in the construction materials sector are pegged to rise 22% in FY27 but margins may remain constrained due to high raw material costs. Demand from the infrastructure sector is, however, steady, Kotak Securities said. Meanwhile, volumes of companies involved in consumer discretionary products and staples are expected to recover slightly. 

 

The net income of consumer staples companies in the Nifty 50 Index is seen declining 4% in FY27 due to a decline in profit of ITC Ltd. on steep increase in taxes on tobacco. Excluding ITC, profits of Nifty 50 companies in the sector will grow 12%, according to Kotak Securities. These companies are Hindustan Uniliver Ltd., Nestle India Ltd., and Tata Consumer Products Ltd. 

 

For the June quarter, the net income of the Nifty-50 Index grew 17.7% on year, higher than the brokerage's expectation of a 10.4% growth. The earnings before interest, taxes, depreciation, and amortisation of the index constituents increased 15.7% on year as against its estimate of a 12.2% increase.  End

 

US$1 = INR 95.67

 

Reported by Ruchira Kagita

Edited by Akul Nishant Akhoury

 

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