MUMBAI: The pace of earnings growth of the top 500 companies in the country during April-June quarter (Q1 of FY27) stood at 13% on an annual basis. But, excluding oil marketing companies, that are facing huge input cost pressures due to the war in West Asia, earnings growth was 23%, a more than two-year high, a report by Motilal Oswal Financial Services showed.Mid and small cap companies continued to outperform large caps in terms of earnings growth, although in terms of sales growth during the quarter, large caps were ahead of mid cap companies but trailed small caps.On the sectoral front, metals and financials led the quarter, while OMCs dragged sharply. “The healthy earnings growth in 1QFY27, was fuelled by a resilient macro environment, better-than-expected margin print, and improving operating conditions, which supported a strong earnings momentum. These factors further strengthened the earnings cycle from the FY25 lows,” the report said.
Telecom, metals lead the way
It also noted that the aggregate sales of Nifty 500 companies excluding-OMCs grew 19% YoY in Q1FY27, marking the strongest growth in 15 quarters after a prolonged period of moderate revenue growth. It also noted that earnings before interest, taxes, depreciation and amortisation (EBITDA), again excluding-OMCs, grew 16% on the year during the quarter.Broad-based growthOn the sectoral front, the report noted that corporate earnings during April-June clocked broad-based growth, with significant contributions from metals, financials and telecom.Telecom earnings rose 384%, metals was up 57% on the year (marking the fourth consecutive quarter of strong earnings growth), while financials, led by NBFCs-lending grew 27% and banks (15%). Technology (14%) was another key contributor to the quarter’s earnings. In contrast, earnings of oil & gas companies dipped 34% on the year, led by OMCs (which reported a loss of Rs 18,100 crore in Q1FY27 against a profit of Rs 16,200in Q1FY26) and cement (-1%) dragged overall earnings.Small cap companies led the Q1FY27 earnings performance of the Nifty-500, with Nifty Smallcap-250 companies reporting 35% annual growth, the report said.Nifty midcap-150 companies (ex-OMC) also delivered a strong 30% YoY growth, while largecaps (ex-OMCs) reported 20% YoY growth, the highest in 10 quarters.