5 heavyweights drive most of Nifty’s Q2 profit growth so far

Mid-caps companies post highest earnings growth.

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26 Aug, 2025 12:21

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So far, 27 Nifty companies have reported earnings, showing a 5 percent year-on-year growth, slightly below expectations of 6 percent. Growth was mainly powered by HDFC Bank, Reliance Industries, TCS, JSW Steel, and Infosys, which together contributed more than the total net growth (122 percent of incremental earnings).

On the other hand, Motilal Oswal noted that Coal India, Axis Bank, Eternal, HUL, and Kotak Mahindra Bank dragged Nifty earnings lower. Of all the companies that have reported their earnings, seven companies within the Nifty reported lower-than-expected profits, while five recorded a beat, and fifteen registered in-line results.

From the benchmark Nifty 50 pack, the top FY26E upgrades include HDFC Bank (up 4.2 percent), Shriram Finance (up 4.5 percent), UltraTech Cement (up 3.2 percent), and Dr. Reddy’s Laboratories (up 2.9 percent).

Top FY26E downgrades include Eternal (down 37.9 percent), HDFC Life Insurance (down 10.7 percent), NTPC (down 9.2 percent), Coal India (down 6.3 percent), Reliance Industries (down 3.5 percent), and SBI Life Insurance (down 3 percent). According to the brokerage, large-cap companies have posed an earnings growth of 13 percent YoY, which is similar to the overall universe.

On the other hand, mid-caps companies have extended their streak of the past three quarters and yet again delivered the highest growth at 26 percent YoY, compared to the estimate of 19 percent. “Multiple mid-cap sectors clocked impressive growth, including Technology, Cement, Metals, PSU Banks, Real Estate, and NBFC – Non-Lending,” noted the brokerage.

In contrast, small-caps continued to show weakness across several sectors, including private banks, non-lending NBFCs, technology, retail, and media, all of which reported a year-on-year earnings decline. Overall, small-cap earnings rose 3 percent year-on-year (against Motilal Oswal’s estimate of 4 percent), with 69 percent of the coverage universe meeting or exceeding the brokerage’s expectations.

According to the brokerage, the earnings cycle is bottoming out, with growth expected to accelerate into double digits. Valuations are reasonable, with the Nifty trading at 21.4x, near its LPA of 20.8x. Any signs of earnings growth acceleration should support valuation expansion.

Going ahead, the cavalry of measures by the government will help reset the trajectory of corporate earnings as domestic reforms are expected to continue.

Disclaimer: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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