Mumbai: India’s Q2 FY26 earnings season surpassed expectations, aided by robust performance in the midcap segment, even as certain smallcap pockets showed signs of weakness, according to industry data.
Brokerage Motilal Oswal Financial Services reported a 14% year-on-year earnings rise among companies that declared results so far. This performance largely met market expectations. Large-cap earnings grew 13%, matching the broader market, while mid-caps outperformed with a 26% rise. Technology, cement, metals, PSU banks, real estate, and non-lending NBFCs supported the growth.
Small-cap companies lagged, posting only 3% growth. Private banks, non-lending NBFCs, technology, retail, and media slowed performance. Nevertheless, 69% of small-caps met or exceeded forecasts. Comparatively, 84% of large-caps and 77% of mid-caps performed as expected. This shows mid-caps remain resilient despite small-cap pressures.
Sectoral analysis revealed strong gains in oil, gas, and cement. State-run fuel retailers boosted profits by 79%, while cement companies surged 147%. Additionally, technology profits rose 8%, capital goods 17%, and metals 7%. Together, these sectors contributed over 80% of incremental profit growth, highlighting concentrated sectoral leadership.
Among Nifty firms, 27 companies reported earnings growth of 5% year-on-year. HDFC Bank, TCS, JSW Steel, and Infosys drove performance. Conversely, Coal India, Axis Bank, HUL, Kotak Mahindra Bank, and Eternal pulled down growth. Seven Nifty companies missed estimates, five exceeded forecasts, and 15 met expectations, showing mixed but generally stable outcomes.
Importantly, earnings upgrades now outnumber downgrades for the first time in several quarters. This suggests healthier market conditions and growing confidence in India Inc.’s profitability. Although headline indices remain range-bound, fundamentals continue improving. Moderating earnings cuts, diversified sector gains, and robust midcap resilience indicate a stronger underlying market.