Nifty Earnings To See 10 Per Cent Growth In FY26 Vs 1 Per Cent Last Year, Says Report

The brokerage attributed the projected EPS growth in FY26 to an expected improvement in the macroeconomic environment, supported by stimulative fiscal and monetary measures.

The report also mentioned sectoral preferences. The brokerage is overweight on BFSI, Consumer Discretionary, Industrials, Healthcare, and Telecom sectors, and underweight on Oil & Gas, Cement, Real Estate, and Metals.

Source : Freepik

The earnings per share (EPS) of Nifty 50 companies is projected to grow by approximately 10 per cent in the current financial year (FY26), according to a report by Motilal Oswal. This marks a significant improvement from 1 per cent growth recorded in FY25.

The report stated that the earnings for the first quarter of FY26 (1QFY26) have largely been in line with expectations. The brokerage attributed the projected EPS growth in FY26 to an expected improvement in the macroeconomic environment, supported by stimulative fiscal and monetary measures.

It stated "EPS growth for Nifty50 is projected to rise to ~10% in FY26 ...aided by a likely improvement in the macro environment owing to the stimulative fiscal and monetary measures".

The report mentioned that the markets have also shown a strong recovery since the lows of April 2025. Although July 2025 was relatively weak, it expects that better earnings prospects and reasonable valuations, excluding small-cap stocks, should help the market register gains.

Currently, the Nifty is trading at 22.1 times its estimated FY26 earnings, which is close to its long-period average (LPA) of 20.7 times. The model portfolio of the firm continues to favour large-cap stocks with a 70 per cent allocation but has increased its weightage on mid-cap stocks to 22 per cent from 16 per cent earlier, given the improved earnings delivery and outlook.

The report also mentioned sectoral preferences. The brokerage is overweight on BFSI, Consumer Discretionary, Industrials, Healthcare, and Telecom sectors, and underweight on Oil & Gas, Cement, Real Estate, and Metals.

In terms of sectoral performance, private banks reported mixed results in 1QFY26, with some showing healthy earnings, while most public sector banks (PSBs) witnessed a decline.

NBFCs posted subdued results, with asset quality and loan growth impacted by seasonal factors like early monsoons and a weak macroeconomic backdrop. Staples companies had a stable quarter, with volume uptick supported by a continued rural recovery and a moderate improvement in urban demand.

Most companies reported muted volume growth, but this was offset by better net sales realizations (NSR), resulting in stable revenue performance. The IT sector faced a tough quarter, with median revenue rising only 0.8 per cent quarter-on-quarter in constant currency terms. Factors such as GenAI-led productivity gains, weak macro conditions, and cautious client behaviour weighed on performance.

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)