India Inc wrapped up the March quarter earnings season on a positive note, with corporate results surpassing market expectations and signaling a rebound after three quarters of sluggish growth. This improvement was mainly fueled by easing inflation and reduced input costs, which enhanced operational profitability across various sectors.
Large Caps Outperform Mid and Small Caps
Large-cap companies spearheaded the earnings recovery, outperforming mid- and small-cap firms. An analysis by brokerage firm Equirus Securities showed that overall EBITDA and earnings for the quarter exceeded estimates by 4% and 5%, respectively. Year-on-year (YoY), EBITDA grew by 6% and earnings by 4%, while revenue increased by 5%, largely in line with expectations.
Within Equirus’s coverage of 270 companies, large caps (54 firms) posted a healthy 6% YoY earnings growth. Mid-caps (68 firms) showed a modest 2% rise, whereas small caps (148 firms) suffered a steep 16% YoY earnings decline. This divergence underscores a market preference for larger, more stable companies amid a challenging economic backdrop.
Sectoral Performance and Exclusions
Excluding Oil Marketing Companies (OMCs), EBITDA and earnings growth were 5% and 3% YoY, respectively. The ex-BFSI (Banking, Financial Services, and Insurance) group demonstrated stronger momentum, with EBITDA and earnings growth of 7% and 6% YoY. Sectors such as retail, pharmaceuticals, capital goods, and consumer durables showed robust operating profit gains, while FMCG, infrastructure, IT, and automobile sectors recorded subdued performance.
Earnings Estimate Upgrades and Downgrades
Approximately 28% of companies saw upward revisions in earnings per share (EPS) forecasts for fiscal 2026, particularly in capital markets, chemicals, defense, metals, and textiles. Conversely, EPS downgrades were observed in consumer durables, FMCG, and building materials, indicating potential headwinds for these sectors.
Cautious Outlook Amid Demand and Cost Pressures
Looking ahead, Equirus Securities maintains a cautiously optimistic stance. It notes that some sectors may continue to face challenges from pricing pressures, rising input costs, and demand volatility. However, strategic efforts such as cost-saving measures, product innovation, and market expansion are expected to support profitability and growth.
The strong showing by large caps underscores their resilience in a volatile market, suggesting that these companies will likely maintain relative stability in the near term.
