The brokerage said that the growth has outpaced its expectation of 7% and reiterated its top Nifty picks, including Bharti Airtel, SBI, ICICI Bank, M&M, Titan, Eternal, Shriram Finance, Bajaj Finance and InterGlobe Aviation, its said in its August strategy note.
The brokerage said the earnings growth has been driven largely by Reliance Industries, JSW Steel, ICICI Bank, Bajaj Finance and Axis Bank. Together, these five companies accounted for 59% of the incremental year-on-year earnings growth. On the other hand, InterGlobe Aviation, ITC, Dr Reddy's Laboratories, Cipla and Maruti Suzuki weighed on Nifty earnings during the quarter.
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Largecaps vs smallcaps vs midcaps
Excluding oil marketing companies, largecap and midcap earnings grew 15% and 25% year on year, respectively, ahead of the brokerage's estimates of 11% and 20%.
Smallcap companies also delivered a healthy performance. The brokerage said earnings for 90 smallcap companies rose 32% year on year, beating its estimate of 26%, aided by a favourable base and led by financial companies. Excluding financials, smallcap earnings grew 12% against an estimate of 11%.
The brokerage added that earnings revisions have remained positive so far, with 70 companies receiving upgrades of more than 3% to FY27 estimates compared with 45 companies seeing downgrades, resulting in an upgrade-to-downgrade ratio of 1.6 times.
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Despite the macro challenges, the brokerage said it continues to view the market as a bottom-up stock picker's market.
Apart from its preferred Nifty names, it identified TVS Motor, Radico Khaitan, Indian Hotels, RBL Bank, Dixon Technologies, Coforge, Kirloskar Oil Engines, Arvind, TBO Tek, Delhivery, HDFC AMC, Meesho and BSE as its top non-Nifty investment ideas.
