Strong Q4 results unlikely to sustain as macro risks mount: Antique Report
New Delhi, June 9
Strong corporate earnings in the fourth quarter of FY26 may not sustain in the coming quarters, as margin pressures and weakening demand could lead to earnings downgrades amid rising prices and macroeconomic uncertainties, according to a report by Antique Stock Broking.
The report noted that Nifty 50 companies delivered robust performance during the quarter, with revenue, EBITDA and profit after tax (PAT) rising 14 per cent, 11 per cent and 11 per cent year-on-year, respectively.Across the broader market, including financials, commodities and telecom sectors, revenue, EBITDA and PAT grew 14 per cent, 11 per cent and 10 per cent, respectively.
"Our coverage universe's 4QFY26 operating earnings (excluding financials) were ahead of our expectations by around 2 per cent, primarily driven by oil marketing companies. However, scope for earnings downgrades exists in the coming quarters," the report said.
However, Antique said the projected 17 per cent year-on-year growth in Nifty 50 earnings for FY27 appears optimistic and could result in an earnings downgrade of nearly 4 per cent in the coming quarters.
The brokerage attributed the risks to several macroeconomic challenges, including geopolitical tensions in West Asia, which have pushed up crude oil and other commodity prices, as well as concerns over a potential deficiency in the south-west monsoon.
"Management commentary suggests that margins and volume demand may remain under pressure due to calibrated price hikes and prevailing macro uncertainty," the report said.
On the macroeconomic front, Antique expects India's real GDP growth to moderate to 6.7 per cent in FY27 from 7.7 per cent in FY26.
"We expect India's real GDP growth to soften to 6.7 per cent YoY in FY27 from 7.7 per cent in FY26 amid multiple headwinds, including elevated energy and commodity prices, supply disruptions, possible deficiency in the south-west monsoon, weak global demand, and higher freight and insurance costs," the report added.
Despite the near-term challenges, the brokerage remains constructive on financials, industrials, defence, real estate and pharmaceutical sectors, while maintaining a cautious view on consumer staples, IT services, consumer durables and consumer services.
Antique also revised its March 2027 target for the Nifty 50 index to 27,000 from the earlier target of 28,000, citing the likelihood of earnings downgrades in the coming quarters.
"Our Nifty 50 FY27 and FY28 EPS estimates stand at 1,251 and 1,435, respectively, and our March 2027 Nifty target has been revised lower to 27,000 based on 19 times FY28 EPS," the report said.
— ANI
Reader Comments
Finally some realism in the market! Too many people were getting carried away with the Q4 numbers. Crude prices and geopolitical tensions are real threats. Antique is right to cut target to 27,000 - better to be cautious than reckless. 📉
I've been saying this for months. The Indian market is overvalued relative to its growth prospects. A 6.7% GDP growth is still impressive globally, but 17% earnings growth expectation was always too optimistic. Smart investors should look at defensives like pharma and industrials as the report suggests.
My father always said - when everyone is celebrating, be careful. Q4 was great but with crude above $90 and worries about monsoon, the next few quarters will test the market's resilience. At least Antique has given a clear roadmap - financials, real estate, pharma are buys. Makes sense! 🧠
The report is spot on about margin pressures. Calibrated price hikes won't fully offset input cost inflation. I work in consumer durables and we're already seeing volume slowdown. The next few months will be crucial - if monsoon fails, rural demand will take a big hit. Not a time for aggressive bets.
Interesting that they're bullish on defence and industrials but cautious on IT services. Make in India and defence manufacturing are indeed strong themes. But 19 times FY28 earnings for Nifty still seems expensive if growth slows. Would wait for a deeper correction before adding positions. Just my two paise! 😊
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