The earnings downgrade cycle for Nifty50 companies showed signs of easing in August, with 23 of the 50 index constituents, or 46%, seeing upgrades to their FY27 EPS estimates, according to JM Financial. Overall, FY27 EPS estimates for the Nifty50 edged up 0.1% month-on-month in August, reversing some of the weakness seen in July. The improvement came after FY27 EPS estimates fell 0.7% month-on-month in July, with FY28 EPS estimates also rising 0.2% in August, after declining 0.5% in July. As per The Financial Express, the improvement signals that while stock prices may remain weak, earnings expectations are beginning to look up.
Five companies emerged as the biggest beneficiaries of August's earnings revisions, with Grasim Industries, Bajaj Finserv, Hindalco Industries, State Bank of India (SBI) and Titan Company recording the largest FY27 EPS upgrades during the month. According to JM Financial, Grasim Industries received the biggest upward revision in FY27 earnings expectations, followed by Bajaj Finserv, which featured among the five stocks with the largest FY27 EPS upgrades despite the broader banking space seeing several downgrades. Hindalco Industries also saw a significant upward revision in earnings expectations, while SBI and Titan completed the top five list. The brokerage noted that stocks with the biggest EPS cuts were ITC, Tata Steel, Kotak Mahindra Bank, Maruti Suzuki and Adani Enterprises, whereas those with the largest upgrades were Grasim, Bajaj Finserv, Hindalco, SBI and Titan.
Cement emerged as the biggest contributor to the improvement in earnings estimates in August, with JM Financial reporting that FY27 EPS estimates for the sector rose 9% month-on-month. NBFCs followed with a 1.8% increase, while oil & gas and metals & mining saw 0.5% increases in FY27 EPS estimates. The brokerage noted that upgrades were relatively broad-based across some sectors, with both oil & gas companies and both cement companies in the Nifty50 receiving upgrades, along with the index's lone telecom company. As per The Financial Express, cement led with a 9% month-on-month upgrade, followed by NBFCs at 1.8%, while oil and gas and metals and mining saw 0.5% upgrades each.
While some sectors showed improvement, others continued to face pressure. Consumer companies saw the sharpest cut in FY27 EPS estimates at 4.7% month-on-month, followed by automobiles at 2.2%, according to JM Financial. At the individual stock level, ITC, Tata Steel, Kotak Mahindra Bank, Maruti Suzuki and Adani Enterprises saw some of the biggest cuts to their FY27 EPS estimates during the month. Overall, 17 Nifty50 companies, or 34%, saw FY27 EPS downgrades in August. The brokerage noted that key sectors that witnessed over 1% cut in FY27E EPS MoM were consumer stocks at 4.7% and automobiles at 2.2%.
The improvement comes after a significant earnings reset over the past year, with JM Financial reporting that Nifty50 FY27 EPS estimates have been cut 9.3% between August 2025 and August 2026, while FY28 estimates have declined 7.5%. Over the same period, the Nifty50 has delivered a negative return of 1.4%. At the stock level, Grasim, Bajaj Finserv, Hindalco, SBI and Titan recorded some of the biggest FY27 EPS upgrades in August, while metals & mining recorded the highest proportion of cuts with three of its four Nifty50 companies seeing downgrades. The August improvement is modest when compared with the longer term trend, but marks a change from July when FY27 and FY28 EPS estimates had declined 0.7% and 0.5% respectively.
