India Inc's 4QFY26 earnings were decent but 1QFY27 could be bumpy: Kotak
New Delhi, June 2
India Inc delivered better-than-expected earnings in the March quarter of FY26, but the current quarter could be "bumpy" as the ongoing West Asia conflict raises risks from higher oil prices and input costs, according to a Kotak Institutional Equities report.
In its latest strategy report, Kotak said that while the January-March quarter delivered stronger-than-anticipated earnings growth, rising energy prices and supply disruptions linked to the conflict in West Asia could weigh on business performance in the months ahead.
"4QFY26 results were decent but 1QFY27 could be bumpy," the report said.
The brokerage noted that earnings growth during the March quarter exceeded its estimates across key market segments.
"4QFY26 net income of the Nifty-50 Index grew 6.6%, versus our expectation of 2.2% growth and net income of KIE Coverage Universe grew 14%, versus our expectation of 7.3% increase," the report said.
According to the report, the near-term outlook for corporate earnings will depend significantly on developments in West Asia and their impact on global energy markets.
"The Indian market's performance over the next few months would depend on the outcome of the ongoing West Asia war," Kotak said.
The report noted that a quick resolution of the conflict would have only a limited impact on corporate earnings, while a prolonged crisis could hurt both economic growth and company profits.
"A swift resolution could result in moderate negative impact on the macro and limited negative impact on earnings. However, a prolonged crisis could result in a deeper negative impact on both the economy and earnings," it said.
"India's macro-economic outlook has deteriorated given higher global oil and gas prices since the start of the West Asia war," the report said.
The brokerage warned that domestic consumption-oriented sectors could face pressure if energy prices remain elevated for a prolonged period.
"We do not rule out earnings downgrades in the domestic consumption sectors from longer-than-expected disruption to global oil and gas supplies and higher-than-expected input prices," it said.
However, despite the near-term risks, Kotak remains optimistic on the broader earnings outlook and expects profits of Nifty-50 companies to recover strongly in the coming years.
"We expect FY2027E and FY2028E net profits of the Nifty-50 Index to grow 18% and 14% after a muted 8% in FY2026," the report said.
— ANI
Reader Comments
"Bumpy" is the right word! My mutual fund portfolio is already feeling nervous. But if Nifty profits can grow 18% in FY27 as they say, maybe we just need to hold on for a few months. Fingers crossed! 🤞
Interesting report. The 6.6% growth for Nifty-50 in 4Q vs expected 2.2% is quite a beat. But that consumption sector warning is concerning—if input costs rise, it'll hit everything from FMCG to auto. Let's hope this West Asia thing gets resolved soon.
Typical broking firm trying to sound cautious but optimistic at the same time. The fact is, India's economy is resilient but not immune. A prolonged war will hurt everyone—from the auto driver paying more for petrol to the IT guy worried about global demand. Let's pray for peace 🙏
As someone working in a manufacturing company, I can tell you the input cost pressure is already real. Raw material prices have shot up in the last two months. Kotak warning about consumption sectors is spot on. Let's hope our RBI and govt have a plan to manage this.
Decent analysis, but I wish they'd also talk about how domestic consumption could be supported if oil prices stay high—maybe more government spending or subsidies? The broader outlook for FY27-28 seems promising though. India's story is still intact, just a bit of turbulence ahead.
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