Earnings misses pile up: Over half of Nifty 50 companies fall short of expectations

Many companies have underperformed relative to modest expectations, with net sales, EBITDA, and net profits generally falling short. Consumer companies reported weak volume growth, accompanied by cautious commentary around demand challenges. IT firms also delivered lacklustre results, suggesting a slow path to recovery. In contrast, banks performed reasonably well, showing moderate year-over-year credit growth, stable net interest margins (NIMs), and consistent asset quality on a quarterly basis, analysts added.

According to a recent report by Motilal Oswal Securities, Q2 earnings of Nifty firms have been flat YoY (vs. est. of +2% YoY), fueled by ICICI Bank, Axis Bank, Bharti Airtel, NTPC, and HDFC Bank. Conversely, BPCL, JSW Steel, Coal India, IndusInd Bank, Reliance Industries, and Ultratech Cement contributed adversely to Nifty earnings. Nine companies within the Nifty50 universe reported profits below its expectations, while 10 recorded a beat and 15 registered in-line results, as per the analysis by the domestic broking firm.

Further, the broking firm has cut Nifty EPS estimate for FY25 by 1.2% to Rs 1,059, largely owing to BPCL, Reliance Industries, and Coal India. FY26E EPS was also reduced by 1% to Rs 1,256 (from Rs 1,269) led by downgrades in BPCL, Reliance Industries, Maruti Suzuki, Bajaj Finance, and IndusInd Bank. Nifty FY25 EPS cut was after a previous 4% cut, marking a total 7% downward revision over six months.

More importantly, the expected FY25 earnings growth is now just 5% — the lowest since FY20.

Similarly, Kotak Institutional Equities has downgraded earnings expectations for the Nifty50 and consumer-focused segments following weaker-than-expected Q2FY25 results and cautious management outlooks, especially in consumption-driven sectors. Projections now indicate modest net profit growth of 5% for FY2025 and 17% for FY2026. Markets have shown increased sensitivity to earnings misses, signalling a shift back to fundamentals and valuations, a contrast to recent quarters.

Anirudh Garg, Founder and Fund Manager at Invasset PMS, said this trend highlights structural challenges in the corporate sector. Economic pressures and industry-specific headwinds are weighing on profitability, with financial institutions and consumer sectors particularly impacted by demand shifts and operational pressures. Moving forward, companies must address these issues to restore investor confidence and drive market recovery. Investors should stay alert, focusing on selective opportunities amid ongoing uncertainty, says Garg.

A recent Moneycontrol Market Poll found that, in terms of the key risks, an overwhelming 74 percent of the respondents said that they feel that earnings downgrade is the biggest risk for the Indian stock markets, followed by 22 percent respondents who felt FII outflows is the biggest risk. Interestingly, global factors like the ongoing Middle East tensions and the China stimulus factor does not feature high on the list of key risks amongst Indian experts.