Indian Companies Report Mixed Earnings Amid Mideast Concerns

Strong Earnings Reports#

Indian companies have reported better-than-expected results for the March quarter, with 56% of firms surpassing analyst estimates. This marks the highest success rate in five years, according to an analysis by Jefferies, which looked at 89 companies. Notably, private banks (excluding HDFC and Axis Bank), consumer staples, and cement companies performed well, while information technology (IT) firms fell short of expectations.

Earnings Downgrades Amid Geopolitical Tensions#

Despite the positive earnings trend, 56% of companies experienced earnings downgrades for the fiscal year 2027, an increase of 7 percentage points from the previous quarter. Analysts are adjusting their forecasts due to concerns surrounding the ongoing conflict in the Middle East. The consensus earnings estimates for MSCI India remained flat, with expected growth now at 14% for fiscal year 2027.

Sector Performance Highlights#

Private banks reported stronger asset quality, and non-banking financial companies saw profit growth exceed estimates, driven by improved net interest margins and reduced credit costs. Companies indicated strong momentum in April, with no negative impact from the Middle East conflict on their growth or collections.

In contrast, IT companies reported a slight revenue decline of 0.3% for the quarter, with year-over-year growth of 0.9% in constant currency terms. Major players like Infosys and HCL Technologies provided conservative growth guidance for fiscal 2027.

Consumer Staples and Other Sectors Thrive#

Consumer staples firms such as Hindustan Unilever and Nestle India reported robust results, benefiting from improved volume growth and better margins. The automobile sector also showed solid performance, with over 19% EBITDA growth among manufacturers. Cement companies, excluding Ambuja and ACC, delivered results that exceeded expectations, while Larsen & Toubro's performance was slightly below forecasts due to weaker execution linked to the Middle East situation, although their order flow guidance remains optimistic.