New Delhi [India], August 28 : Nifty-500 companies will likely deliver 13 per cent and 18 per cent earnings growth in FY27 and FY28, respectively, said Kotak Institutional Equities, adding 15/31 sectors are estimated to deliver over 20 per cent earnings growth in FY2027E.
Nifty-500 companies reported broad-based revenue growth acceleration coupled with strong year-on-year earnings growth in Q1FY27, however it excludes oil and gas companies, according to the report.
Nifty 500 companies recorded 20 per cent sales growth, alongside 5 per cent EBITDA and 10 per cent PAT growth.
"We note that revenue growth has seen acceleration across most sectors (18/31 sectors delivered more than 15% revenue growth), resulting in broadening of EBITDA and PAT growth in 1QFY27," Kotak noted.
The top 100 Nifty-500 companies accounted for 66 per cent of total revenue -- marking a modest increase. Meanwhile, the contribution to PAT remained largely stable at 72 per cent during the quarter. At the same time, sales growth, excluding oil and gas, ranged from 13 per cent to 17 per cent across companies of different market sizes.
Notably, large- and small-cap companies saw faster sales growth, while mid- and small-cap companies recorded stronger EBITDA and PAT growth than large-caps in Q1FY27.
Nifty-500 companies saw margins decline by 181 basis points quarter-on-quarter and 253 basis points year-on-year in Q1FY27, excluding BFSI. However, excluding oil and gas and BFSI, margins expanded by 153 basis points sequentially and 10 basis points year-on-year.
Commodity- and energy-linked sectors such as building products, utilities, metals and mining, real estate and specialty chemicals recorded strong margin growth, while automobiles, capital goods, consumer staples, healthcare, oil and gas, and transportation saw significant declines.
"We note that RM costs (ex-oil & gas) remain at elevated levels, while employee expenses/sales were broadly stable ex-oil & gas," Kotak noted stressing, "consensus is currently projecting 13%/18% earnings growth on full float basis for Nifty 500 companies over FY2027/28E."
Earnings growth expectations remain broad-based, with 15 of 31 sectors projected to record more than 20 per cent growth in FY2027. However, overall earnings estimates remain largely unchanged, despite notable revisions in some sectors, Kotak noted.