Key facts
- Indian companies posted 14% profit growth in the March quarter of FY26.
- Revenue growth for non-financial firms accelerated to 12.3% year-on-year.
- Mid-cap companies saw a 34.3% profit surge.
- Energy and materials sectors were standout performers with over 23% profit growth.
- Corporate balance sheets and cash flows remained healthy.
- Capital expenditure growth slowed to 9% in FY26.
Indian companies demonstrated robust financial performance in the March quarter of FY26, achieving a 14% profit growth despite global energy shocks stemming from the U.S.-Israel war. This marks the second consecutive quarter of double-digit earnings growth for the BSE 500 companies.
Revenue growth for non-financial firms accelerated to 12.3% year-on-year, up from 9.2% in the previous quarter. The performance was broad-based, with mid-cap companies emerging as standout performers, posting a 34.3% profit increase. Large-cap and small-cap companies saw 10.3% growth.
Energy and materials sectors were particularly strong, with profit after tax (PAT) growing by 23.8% and 23.1%, respectively. However, Emkay Global Financial Services noted that energy sector gains were partly supported by inventory benefits and may not be sustainable. Consumer discretionary, consumer staples, financial, and IT companies also reported healthy earnings growth of 13-18%.
Corporate balance sheets remained strong, with an operating cash flow to EBITDA ratio of 82.4% and a free cash flow to PAT ratio of 61% for FY26. Operating cash flow and free cash flow grew by 13% and 15%, respectively, during the year.
Despite improved cash generation, corporate capital expenditure growth slowed to 9% in FY26 from 18% in FY25, a trend most visible in the energy and utilities sectors. This slowdown raises concerns about future investment momentum.
Looking ahead, Emkay Global remains optimistic for FY27, with consensus estimates projecting a 13.8% rise in Nifty earnings per share. The firm cited improving consumption trends, resilient corporate balance sheets, and healthy cash flows as foundational strengths for Indian equities. The primary risk identified is any prolonged disruption to global energy supply chains due to Middle East tensions.