Poor track record of earnings estimates warrants caution, says JM Financial
This story was originally published at 12:49 IST on 4 June 2026
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MUMBAI – Analysts at JM Financial Institutional Securities are cautious of earnings estimates for the ongoing financial year after such estimates over the past two years have failed to project earnings correctly. There is a higher possibility of downgrades in estimates given the track record of such estimates and risk from high crude oil prices, the analysts said.
"While Q4FY26 results have led to an upward revision in our FY27E Nifty50 EPS growth forecast to 17.1%, the recent track record of earnings downgrades warrants caution," analysts said in a report. "Against the backdrop of elevated crude oil prices, potential inflationary pressures and rising external uncertainties, we believe the risk to FY27E earnings expectations remains skewed to the downside."
JM Financial said the growth in earnings per share of the Nifty 50 index companies during 2025-26 (Apr-Mar) was 4.5%, while it was estimated at 12-15% at the start of the year. Similiarly, EPS growth for the index companies in FY25 was 3.4%, while the consensus estimated the growth at 15%, the report said. This wide underperformance has made JM Financial cautious of the future.
"While part of this divergence reflects the impact of Nifty50 reconstitution during FY26, earnings underperformance across sectors relative to their initial expectations was also a noteworthy factor," the analysts said.
The highest number of misses was seen for small-caps, the report said. "If we split the Q4FY26 performance by market cap, we see that the proportion of misses was the largest in small-caps, followed by large-caps and then mid-caps; 33% of small-cap companies missed expectations while the misses were fewer in mid-caps and large-caps at 18% and 29%, respectively," it said. End
Reported by Anshul Choudhary
Edited by Akul Nishant Akhoury
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