Kolkata: Through the elevated crude oil and natural gas prices that have been caused by the US-Iran war, the earnings potential of India Inc is going to take a hit this year, analysts have predicted. Global broking major JP Morgan has said that the FY27 earnings in India will be down 2-10% on a weighted-average basis over the last few weeks in sectors such as consumers, auto, financials and oi marketing companies. The jump in crude oil and natural gas prices are not yet factored in and will likely impact financial results in the next couple of quarters, during which oil and gas prices are not likely to come down quickly, analysts have said. Earlier this month global brokerages such as Morgan Stanley and Nomura also made forecasts about the Indian stock market, movement of BSE Sensex and Nifty 50.
Andrew Holland of Nippon India AMC
One of the prominent names to opt for a trimming of earnings forecast is Andrew Holland, who heads the new asset class in Nippon India Asset Management. Earlier, he expected an earnings growth of 10–12%. “If the situation (in West Asia) resolves quickly, there might be a one-quarter blip, but we should return to that 10–12 per cent trajectory. If it drags on, earnings growth expectations could be revised down to around 6–10 per cent,” Holland has been quoted in the media as saying.
JP Morgan estimates
JP Morgan has highlighted the downside risks to corporate earnings this year. Even if the ceasefire holds, it will take the energy supplies nothing less than four months to become normal again. Natural gas output has been hit harder with significant damages to major gas fields in the Gulf countries such as Qatar.
“Challenges will manifest across sectors in various ways, including direct consumption impacts, margin compression, operational disruption and second-order effects. We cut our CY26/27 MSCI India earnings growth forecasts by 2 per cent / 1 per cent, to 11 per cent / 13 per cent,” JP Morgan analysts mentioned in a recent note.
“For overall FY27 we were looking at Nifty EPS (earnings per share) growth 15 per cent before the West Asia war started. My preliminary view is that it may come down to 7-8 per cent if the war continues and oil prices stay elevated for a few more months. The impact may be felt across automobiles, oil and gas, airlines sectors,” head of research at Elara Capital, Bino Pathiparampil, was quoted in the media as saying.
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