According to Motilal Oswal estimates, 44 companies are likely to report double-digit year-on-year profit declines in the June quarter. The brokerage expects overall earnings growth to slow significantly, with its coverage universe likely to report 10% year-on-year profit growth, which is lower than the 18% and 15% growth seen in the previous two quarters. Excluding financials, profit growth is estimated at 9%, while excluding oil marketing companies, it is seen at 10%. The Q1 landscape will shape risk appetite and sector leadership in the weeks ahead, with the implications for retail investors immediate as stock prices could swing on quarterly profit signals and margin pressures.
The brokerage identified several large companies across aviation, defence, cement, chemicals, banks, healthcare, oil and gas, real estate and telecom sectors likely to report double-digit profit falls. Bharti Airtel's profit is expected to decline 31% year-on-year, while InterGlobe Aviation, which runs IndiGo, may see profit fall 30% year-on-year. In the automotive sector, Tata Motors' commercial vehicle business may report a 14% drop. The chemicals sector may remain weak, with Cipla expected to report a 33% decline and Alkyl Amines down 24%. Gujarat Gas is forecast to show a profit decline of 97% YoY in Q1, highlighting the severe impact of higher energy costs across sectors. Higher energy costs, weaker demand, geopolitical tensions and margin pressure are expected to weigh on earnings, even as overall corporate profit growth slows in Q1.
Cement companies are expected to face significant pressure, with Ambuja Cements' profit may fall 13%, ACC's 16%, Dalmia Bharat's 39%, JK Cement's 18%, JK Lakshmi Cement's 35% and Shree Cement's 11%. The chemicals sector may remain weak, with Alkyl Amines expected to report a 24% drop in profit, Clean Science 43%, Deepak Nitrite 27%, PI Industries 19% and Vinati Organics 15%. Cipla is among the names flagged for a significant profit decline – about 33% YoY in Q1, which serves as a bellwether for the India pharma sector's export and domestic growth. The broad pattern across these groups highlights that consumer discretionary and capex-sensitive plays could lead the earnings downgrade, while some pockets of resilient demand may emerge in affordable housing and repair-and-maintain segments.
The crude and gas price spike has reversed the recent trend of positive earnings revisions, with Motilal Oswal cutting FY26 earnings estimates for its coverage universe by about 1.4%, bringing expected fourth-quarter profit growth down to 10% from an earlier estimate of 14%. The macro backdrop shaped by the Iran-Israel/US conflict adds a new layer of uncertainty for crude oil and gas prices, which can squeeze margins, currency dynamics, and inflation. Midcaps and smallcaps are projected to grow 25% and 18% YoY respectively, while largecaps grow around 7%. The scale of downgrades across oil and gas, real estate, and the broader economy underscores the challenge of margin compression and demand weakness in a high-inflation environment. The key risk for Indian equities is a prolonged conflict in West Asia, which could hurt risk assets, raise inflation, put pressure on the rupee and damage corporate profitability.
Despite current challenges, Motilal Oswal expects India's market base to become more favourable after recent underperformance. The brokerage expects earnings growth of about 16% CAGR for both the Motilal Oswal universe and the Nifty over FY26-28, helped by policy measures, domestic investor support and a possible improvement in foreign flows once geopolitical risks ease. For retail investors, the key is to identify quality earnings and margin resilience rather than chasing every upbeat revision, focusing on high-quality franchises with visible earnings durability. In a world of mixed signals, the key is to separate stock-specific earnings risk from macro-driven price movements, with a disciplined approach focusing on quality franchises with visible earnings durability.
