Mumbai: India is showing early signs of a long-anticipated earnings upgrade cycle, backed by resilient corporate results, festive demand, policy support, and improving economic indicators, according to a report released on Wednesday.
Following five straight quarters of downward revisions, Nifty earnings forecasts have now turned positive, with upgrades of 0.7 per cent for FY26, 0.9 per cent for FY27, and 1.3 per cent for FY28.
“This reflects a notable sentiment shift and offers the first clear indication of a broad-based rebound in corporate profitability,” PL Capital stated in its findings.
Nifty has advanced 4 per cent over the past three months, breaking out of an extended consolidation phase. The report attributes the market momentum to stronger-than-expected Q2 FY26 earnings, prospects of resolving tariff-related issues with the US, and renewed consumption strength during the festive and wedding season.
The revival has also been aided by the GST rate rationalisation introduced in September 2025, which lowered retail prices across several consumer segments and stimulated spending across urban and rural regions.
Based on a 15-year average price-to-earnings multiple of 19.2 times and a projected September 2027 EPS of 1,515, the report places the 12-month Nifty target at 29,094. The valuation range includes a bull-case scenario of 30,548 and a bear-case outcome of 26,184.
The model portfolio continues to favour banks, healthcare, consumer goods, automobiles, and defence, while keeping lower weightage in IT services, commodities, and oil and gas.
Corporate performance for the quarter remained robust, with companies under coverage reporting an 8.1 per cent rise in revenue, 16.3 per cent growth in EBITDA, and a 16.4 per cent increase in profit after tax. EBITDA and PAT exceeded expectations by 5 per cent and 7.1 per cent, respectively — leading to the first Nifty EPS upgrades since August 2024.
Hospitals, capital goods, cement, electronics manufacturing services (EMS), ports, non-banking financial companies, and telecom sectors registered strong gains. Commodity-linked industries, including cement, metals, and oil and gas, reported profit growth between 33 and 58 per cent.
The report noted that government capital expenditure has been a key contributor to growth over the past four years, rising more than threefold since the pandemic. However, it cautioned that the momentum may ease during the second half of FY26.
Capex in the first half of FY26 has already reached 52 per cent of the full-year target, compared to 41 per cent in the same period last year. Meanwhile, GST rate cuts, increased fertiliser subsidies, and slower direct tax collections could restrict the government’s room to exceed current spending plans.
