JPMorgan: India Equity Strategy 4QFY26 Earnings Preview
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JPMorgan projects Nifty 50 earnings growth of 4% year-over-year for the 4QFY26 earnings season, while its coverage universe (excluding OMCs and LIC) anticipates 10% growth. EBITDA margins are expected to expand by 62 basis points for the Nifty 50 and 56 basis points for the coverage universe. Growth drivers include materials, retail, hospitals, and automobiles, whereas oil and gas, insurance, and EMS present notable drags.
The earnings season unfolds amid significant macroeconomic headwinds, including Middle East conflict spillovers, rising crude oil prices, rupee depreciation, and substantial foreign portfolio outflows. Consequently, investor focus shifts toward growth quality, specifically volume versus pricing dynamics, and sector divergences. While revenue growth remains robust at approximately 8%, margins face looming pressures from input cost inflation and imported inflation, particularly entering the June quarter (1QFY27). Supply chain normalization for energy and shipping flows is projected to require three to four months.
JPMorgan downgraded India's real FY27 GDP growth forecast by 50 basis points, prompting a weighted average FY27 earnings reduction of 2-10% across covered sectors. MSCI India CY26/27 earnings growth estimates were trimmed by 2% and 1% to 11% and 13%, respectively. The firm prefers high-growth domestic cyclicals and downgraded staples to Neutral, reflecting escalating cost inflation and accumulating demand risks. Year-end Nifty 50 targets are set at 30,000/27,000/20,500 for bull/base/bear scenarios.