According to reports from JM Financial, analysts have issued a warning about upcoming earnings downgrades, with FY27 estimates already cut by about 3 per cent so far. The firm expects India Inc's earnings to be significantly impacted by firm crude oil prices amid the West Asia conflict. As reported by JM Financial, the key swing factor is crude oil: a de-escalation in the US–Iran conflict and a move toward $90 per barrel or below would meaningfully ease pressure on earnings. Conversely, any sustained period of elevated crude risks could undermine both fiscal and current account, eventually feeding into earnings growth going ahead.
Against this backdrop, JM Financial has trimmed exposure to consumption-downgrading staples and autos to Underweight given inflation headwinds, limited policy support, and signs that auto demand may have peaked. According to the report, with domestic growth drivers relatively scarce, they have moved financials to Equal Weight (banks at Equal Weight, NBFCs slightly Underweight), while maintaining an Overweight on the real estate sector. The firm has turned more constructive on healthcare and industrials, with healthcare offering a 'resurgence' trade supported by easing US pricing pressure and reduced tariff uncertainty.
As reported by JM Financial, the FY27 earnings momentum has already slowed down for NSE200 stocks under their coverage, projected at around 10 per cent growth versus the 14 per cent compounded annual growth rate delivered in the last two years. The firm noted that discretionary, utilities, information technology, building materials and autos are factoring in higher momentum-based earnings, while only healthcare and real estate are expected to show actual turnaround-type acceleration. Since the beginning of this earnings season, JM Financial has seen FY27 earnings expectations across NSE200 stocks go down by 3 per cent, which should give rise to concerns given that the last two quarters have been almost flat. The brokerage highlighted that while Q4 FY26 results have led to an upward revision in their FY27E Nifty 50 EPS growth forecast to 17.1%, the recent track record of earnings downgrades warrants caution.
According to JM Financial's latest analysis, the brokerage has identified five sectors that must do the heavy lifting in FY27 earnings growth: automobiles (55% YoY growth, 7% weight in Nifty 50 PAT), metals and mining (36% YoY growth, 6% weight in Nifty 50 PAT), NBFC (32% YoY growth, 4.3% weight in Nifty 50 PAT), telecom (44% YoY growth, 3.3% weight in Nifty 50 PAT), and infrastructure (19% YoY growth, 3.2% weight in Nifty 50 PAT). Private banks with a 31.2% weight in the Nifty 50 and expectations of 13% growth in FY27E form the backbone of these expectations. As per UTI AMC's Karthikraj Lakshmanan, private banks continue to remain structurally attractive despite heavy domestic ownership, with current valuations quite attractive compared to their own trading history and delivery capabilities.
According to JM Financial's Q4 FY26 earnings review, out of the 50 companies in the Nifty50, 32% missed estimates while 40% beat estimates. The proportion of misses was largest in small-caps at 33%, followed by large-caps at 29% and mid-caps at 18%. For the entire financial year which ended on March 31, 2026, JM Financial estimated FY26 EPS would grow 12% YoY, but actual growth came in at only 4.5% YoY as earnings expectations steadily weakened through the year. The brokerage noted that while part of this divergence reflects the impact of Nifty 50 reconstitution during FY26, earnings underperformance across sectors relative to their initial expectations was also a noteworthy factor. Despite these concerns, JM Financial emphasized that India remains in a stronger position compared to past stress periods such as 2013, and still retains the potential for double-digit earnings growth in FY27, though recent macro pressures from crude oil prices and geopolitical tensions warrant continued caution.
