India Inc Q2 Earnings Turning Point? Kotak Predicts Nifty 50 Profit Boom!

Kotak Institutional Equities reports that corporate India's Q2 performance, while mixed across sectors, may signal a turning point with improving earnings momentum in select areas. The brokerage anticipates Nifty 50 companies' net profit to grow by 10% in FY26 and 17% in FY27, with these projections remaining largely unchanged following the Q2 results season. This outlook is bolstered by strong performances from key companies like HDFC Bank, ICICI Bank, and Reliance Industries. Companies generally maintained a neutral to optimistic outlook, with expectations for FY27 earnings to be more broad-based.

The consumer sector experienced some pain due to the Goods and Services Tax (GST) transition, with volumes expected to improve in Q3FY26 driven by recovering demand and channel restocking. A predicted bump in GST-cut-led sales was not observed in Q2 but began showing in October 2025.

Kotak remains cautious on IT services companies, citing ongoing macroeconomic headwinds and technology disruption risks. In its model portfolio, the brokerage increased the weight of Reliance Industries by 100 basis points to 9.9%, citing strong performance expected across its refining, digital, and retail segments, assigning a 12-month fair value of Rs 1,600. Larsen & Toubro's weight was raised by 70 basis points to 2.7%, with expectations of continued strength from its robust project pipeline in India and the Middle East, valued at Rs 4,200. Hindalco was removed from the portfolio due to recent outperformance and limited upside.

Impact: This analysis provides crucial insights into corporate earnings, sector trends, and investment strategies, directly influencing investor sentiment and stock valuations. The positive outlook on major conglomerates and infrastructure players signals potential market upside, while caution on IT sectors highlights specific risks. Rating: 8/10

Terms & Meanings: FY26E/FY27E: These refer to the Financial Years 2026 and 2027, with 'E' indicating 'Estimates' or 'Expected' projections. Basis Points (bps): A unit of measure used in finance to describe small changes in percentages. One basis point is equal to 0.01%. Portfolio: A collection of financial investments held by an individual or institution. Refining Segment: Processes crude oil into refined petroleum products. Digital Segment: Refers to telecom and digital services businesses. Retail Segment: Includes supermarket, electronics, and fashion retail operations. IT Services: Companies providing technology-related services. Macroeconomic Headwinds: Adverse large-scale economic conditions like inflation or slowdowns that hinder growth. Technology Disruption Risks: Potential for new technologies to make existing business models obsolete. GST: Goods and Services Tax, an indirect tax in India. Channel Restocking: Retailers replenishing their inventory levels.