Picture perfect quarter? Nifty profit growth hits a 10-quarter high, but 5 stocks do the heavy lifting

Oil and gas companies excluding OMCs contributed Rs 16,900 crore to the year-on-year profit increase, followed by metals at Rs 15,700 crore. Non-bank lenders added Rs 8,000 crore, private sector banks Rs 7,300 crore and state-run banks Rs 3,900 crore.

Metals produced one of the sharpest turnarounds. The sector moved from being among the bottom 10 profit contributors a year earlier to the second largest contributor in the June quarter. Hindalco’s profit increased 118%, while JSW Steel posted growth of 96%. Vedanta’s profit surged 152%.

Nifty’s earnings strength was similarly concentrated. Beyond the five leading contributors, InterGlobe Aviation, ITC, Dr. Reddy’s Laboratories, Tata Motors’ passenger vehicle business and Cipla weighed on profit growth.

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Reliance, Hindalco, ONGC, ICICI Bank and State Bank of India drove the FY27 upgrade. Hindalco received the biggest revision among Nifty companies, with its estimate raised 21.9%. Tata Motors’ passenger vehicle business was upgraded 12.3%, SBI Life Insurance 9.5%, ONGC 7.8% and Reliance 7.4%.

At the other end, InterGlobe Aviation’s estimate was cut 32.8%, the steepest reduction in the index. Dr. Reddy’s was lowered 19%, Tata Steel 13.4% and Wipro 11.8%.

Small caps recorded the fastest growth, with profit surging 31% versus an estimate of 22%. That performance, however, was supported by a favourable comparison with the year-earlier quarter, when profit had increased just 1%. Financial and oil and gas companies were the principal drivers of the small-cap improvement.

Oil marketing companies were the biggest drag on the overall results. The group reported a combined loss of Rs 18,100 crore, compared with a profit of Rs 16,200 crore a year earlier, as elevated crude oil prices hurt performance. InterGlobe Aviation also swung to a loss of Rs 380 crore from a profit of Rs 2,160 crore.

The brokerage increased its FY27 profit estimate for the overall coverage universe by 2%. Large-cap estimates rose 2.5% and small-cap projections increased 1.1%, while the mid-cap forecast was virtually unchanged, declining 0.1%.