The FY26 earnings season in the second quarter (Q2) exceeded expectations, driven by strong midcap performance
MUMBAI — The FY26 earnings season in the second quarter (Q2) exceeded expectations, driven by strong midcap performance, despite some weakness in select smallcap pockets, industry data showed.
Brokerage Motilal Oswal Financial Services reported a 14 per cent year-on-year earnings rise among companies that have declared results so far, broadly in line with expectations.
Large-cap earnings rose 13 per cent, in line with the broader universe, while mid-caps again outperformed expectations with a 26 per cent surge, supported by technology, cement, metals, PSU banks, real estate and non-lending NBFCs.
Smallcaps lagged at 3 per cent growth as private banks, non-lending NBFCs, Technology, Retail and Media weighed on performance. Even so, 69 per cent of small-caps met or beat forecasts, compared with 84 per cent of largecaps and 77 per cent of mid-caps, the data showed.
Sectoral performance analysis showed that oil and gas and cement sectors showed highest sectoral gains as state-run fuel retailers led with a 79 per cent increase in profits, while cement profits surged by 147 per cent.
Along with these sectors, technology profits rose by 8 per cent, capital goods by 17 per cent, and metals by 7 per cent, collectively accounting over 80 per cent of incremental profit growth.
Earnings for 27 Nifty firms that have reported results increased by 5 percent year-on-year, driven by HDFC Bank, TCS, JSW Steel, and Infosys while Coal India, Axis Bank, HUL, Kotak Mahindra Bank and Eternal dragged performance. Seven Nifty constituents fell short of estimates, five exceeded forecasts, and 15 met expectations.
"Earnings upgrades outnumbered downgrades for the first time in several quarters, signalling a healthier market backdrop and improving confidence in India Inc.'s profitability trajectory," the MOFSL report said.
While headline indices remain range-bound after a muted year, underlying fundamentals are improving — supported by moderating earnings cuts, diversified sectoral leadership, and robust midcap resilience, it added.