The Nifty-500 index displayed robust growth in the second quarter of FY26, delivering a double-digit increase in earnings despite geopolitical uncertainties and weak consumer demand, according to a preview by Motilal Oswal Financial Services Limited.
Overall earnings for the Nifty-500 universe rose by 15% year-on-year. When excluding financials, earnings surged by 20%, while excluding metals and oil & gas, growth stood at 9%.
Nifty 500 Review: Mid-Cap and Small-Cap Companies Outperform
Motilal Oswal highlighted that mid-cap and small-cap firms outperformed their larger counterparts during this period. The Midcap-150 companies recorded a 27% rise in earnings, whereas Smallcap-250 firms reported a striking 37% growth. In contrast, large-cap companies within the Nifty-100 posted a more modest 10% increase in earnings, reflecting a more stable but slower growth trajectory.
Sector-Wise Earnings Update: Oil & Gas, Metals, and BFSI Drive Growth Amid Mixed Performance
The oil and gas sector played a pivotal role in driving aggregate earnings, with EBITDA and PAT rising by 48% and 59% respectively, primarily fueled by strong results from oil marketing companies (OMCs). Excluding OMCs, sector EBITDA grew by just 7%, while PAT remained flat.
The metals sector also delivered healthy performance, with PAT rising 18% over a soft base from the previous year. Ferrous companies benefited from better-than-expected net sales realization (NSR), while non-ferrous firms gained from favorable metal prices and stable volumes.
In the banking, financial services, and insurance (BFSI) sector, non-banking financial companies (NBFCs) led earnings growth with a 21% increase, while banks posted flat PAT growth. Many banking analysts expect improved net interest margins (NIMs) in the second half of FY26, supported by CRR cuts and higher loan growth.
Other Key Sector Performances
The cement sector continued its strong run, posting 18% growth in sales and a 49% rise in EBITDA. Capital goods companies also delivered positive results, with sales, EBITDA, and PAT growing 15%, 17%, and 30% respectively, driven by robust order inflows.
The telecom sector turned profitable, posting INR 32 billion in profits compared to a loss of INR 2 billion in the previous year, largely led by Bharti Airtel. Other telecom firms, however, showed muted or declining earnings.
Technology companies recorded an 8% increase in PAT, which exceeded market expectations, though many management teams indicated that demand remains subdued with no clear signs of recovery in spending cycles.
Sectors Facing Challenges
The consumer sector saw its third consecutive quarter of mid-single-digit earnings growth at 5%. While demand for staple companies remained stable, GST transitions and extended monsoon periods impacted overall performance.
The automobile sector faced challenges, with aggregate earnings declining 16%, primarily due to Tata Motors PV. Excluding Tata Motors PV, the sector posted 16% growth, indicating that original equipment manufacturers (OEMs) outperformed auto component firms during the period.
Motilal Oswal’s analysis noted that about 46% of Nifty-500 companies achieved more than 15% PAT growth year-on-year during the quarter. However, sectors such as private banks (-3%), media (-10%), and automobiles (-16%) weighed on overall earnings growth.