Nifty 50 companies expect double-digit revenue growth for Q1 2026, but profit growth is projected to remain subdued due to margin compression from rising costs.
New Delhi, India Jul 8, 2026 ALN: Mumbai: Nifty 50 companies are expected to report year-on-year double-digit revenue growth for the June 2026 quarter, marking the second consecutive quarter of such growth following a series of single-digit increases in the prior six quarters. This anticipated growth reflects a gradual recovery in the Indian economy, which has been navigating various challenges, including global uncertainties, inflationary pressures, and changing consumer behaviors.
However, net profit growth is likely to remain in single digits for the third quarter in a row amid compressed profit margins due to input cost inflation. According to estimates, revenue is expected to grow by 10.6%, while net profit is projected to increase by 5.8%. In the year-ago quarter, revenue and profit growth were 4.9% and 8.5%, respectively. This trend indicates that while companies are generating more revenue, their ability to convert that revenue into profit is being hampered by rising costs.
“We expect the June quarter to mark the beginning of an earnings recovery, although the aggregate numbers will be distorted by the sharp weakness in the performance of oil marketing companies (OMC) due to elevated crude prices during the quarter,” said Siddhartha Khemka, research head at Motilal Oswal Financial Services. He anticipates a healthy earnings growth of 14% for the companies under coverage, excluding OMCs. This highlights how sector-specific dynamics can influence overall market performance, with oil prices playing a significant role in the profitability of certain industries.
Shweta Rajani, associate director at Anand Rathi Wealth, believes profit growth will lag behind top-line growth for the June quarter. “This suggests that business activity has remained healthy, even as higher operating costs continue to weigh on profitability,” Rajani noted. She expects the volatility seen during the quarter, including geopolitical tensions in West Asia, to have only a marginal impact on the June quarter earnings, with a larger effect likely to be seen in the coming quarters. The geopolitical landscape often has a direct bearing on , and the ongoing tensions can lead to fluctuations in oil prices and supply chains, further complicating the earnings outlook for many companies.
The aggregate operating margin is expected to shrink by 100 basis points to 21.9% year-on-year, indicating input cost pressure. “Margins will be impacted by higher crude-linked input costs, logistics expenses, and commodity volatility during the quarter,” Khemka stated. He believes the pressure is largely transitory and that margins should improve over the coming quarters as commodity prices stabilize and operating leverage improves. This perspective suggests that while companies are currently facing challenges, there is optimism that conditions will improve as the market adjusts.
According to Rajani, companies with strong pricing power, particularly in consumer businesses and financial services, are expected to protect their margins better than sectors with limited ability to pass on higher costs. This distinction is crucial, as it underscores the varying capabilities of different sectors to navigate inflationary pressures. Companies that can effectively pass on costs to consumers will likely fare better than those that cannot, leading to divergent performance across the Nifty 50 spectrum.
Select companies from the automobiles, banking, finance, consumer, and metal sectors are likely to report strong growth, while capital goods, cement, IT, and pharma companies may report weaker numbers. This sectoral divergence highlights the complexities of the current environment, where some industries thrive while others struggle.
Revenue growth is expected to remain in double digits, driven by strong volume growth amid sustained demand pull. However, elevated raw material costs will affect profitability, resulting in single-digit net profit growth. The automobile sector has been resilient, buoyed by a recovery in consumer sentiment and increased spending on mobility solutions, but it remains vulnerable to fluctuations in raw material prices.
Deposit growth has continued to trail credit offtake during the quarter, implying sustained elevation in borrowing costs. This is likely to put pressure on net interest margins, although net profit growth is expected to be in double digits. Asset quality is anticipated to remain stable. The banking sector's performance is closely tied to conditions, and while credit demand is robust, the lag in deposit growth could signal challenges ahead.
Revenue and profit growth are expected to be in single digits due to slower project execution in the Gulf region and weakness in government orders. The pace of overall order bookings is also expected to be muted and may remain so in the second quarter due to the monsoon. The capital goods sector often relies heavily on government spending and infrastructure projects, and delays in execution can have significant implications for growth.
Cement companies are likely to face higher input cost pressures, which are expected to compress operating margins. Ultratech is projected to report low-double-digit revenue growth, while net profit may grow in single digits year-on-year. The cement industry is particularly sensitive to fluctuations in raw material costs, and any increase can significantly affect profitability.
Except for ITC, which is expected to perform poorly due to higher duties, consumer goods companies across categories are likely to report double-digit growth in revenue and profit, aided by sustained demand. Higher product prices may offer some comfort amid firm input costs. The consumer goods sector is seen as a bellwether for health, and its performance often reflects broader consumer sentiment and spending patterns.
Top-tier software exporters are expected to show weaker-than-usual revenue growth in dollar terms due to delays in project ramp-ups and slower decision-making by clients. However, year-on-year rupee-denominated revenue growth should benefit from a weaker rupee against major currencies. The IT sector has been a cornerstone of India's growth, but it faces challenges as global clients reassess their spending amid uncertainties.
Oil marketing companies are likely to face higher under-recoveries on fuels and LPG, which are expected to squeeze operating profitability. For oil producers, realizations are expected to improve due to heightened crude oil prices, while gas distributors will benefit from higher sales volumes. The oil and gas sector is heavily influenced by global crude prices, and fluctuations can lead to significant disparities in profitability.
For ferrous companies, volume growth is expected to be muted amid lower exports. This may be partly offset by price increases and safeguard duty imposition. Nonferrous companies are expected to see elevated prices due to supply shortages amid the Gulf crisis, resulting in double-digit earnings growth. The metals sector is often subject to global demand dynamics, and any disruptions can have ripple effects on pricing and profitability.
Profitability of pharma companies with overseas exposure is likely to be under pressure due to deceleration in the US business. This will be partially offset by favorable currency movements and better growth in the domestic market. Hospital chains are expected to continue reporting double-digit revenue and profit growth. The pharmaceutical sector is closely watched due to its importance in healthcare and its role in global supply chains.
Bharti Airtel is expected to report strong net profit growth amid a double-digit rise in revenue. Improving revenue per user, stable tariff charges, and r additions are key positives for the sector. The telecom industry is experiencing significant changes due to technological advancements and evolving consumer preferences, which can create both challenges and opportunities.
Analysts believe growth will strengthen in subsequent quarters. “We expect earnings growth to strengthen over the remainder of the year as domestic demand improves, policy support continues, interest rates soften, and private investment gradually picks up,” Khemka stated. He estimates Nifty 50 earnings to grow by 14% and 15% for FY27 and FY28, respectively. This forecast reflects a broader optimism about the Indian economy's resilience and potential for recovery, driven by favorable domestic conditions and supportive government policies.
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