Nifty Earnings Set for Double-Digit Surge in FY27: SBI Securities
Overview
SBI Securities forecasts Nifty 50 earnings growth will rebound to double digits by FY27, driven by improved consumption, renewed government capital expenditure, and a recovery in sectors like financial services, IT, and cement. The research arm anticipates a 14-15% year-on-year rise, signaling a positive shift from recent single-digit expansions.
Earnings Revival Forecasted
Nifty 50 earnings are poised to re-enter double-digit growth territory by fiscal year 2026-27 (FY27), according to SBI Securities. This marks a significant shift after a prolonged phase of single-digit expansion, with analysts pointing to an improving macroeconomic backdrop.
Sunny Agarwal, Head of Fundamental Research at SBI Securities, projects the Nifty pack to report approximately 14-15% year-on-year earnings growth in FY27. This optimism stems from supportive measures enacted by the government and the Reserve Bank of India (RBI), including rate adjustments and fiscal benefits, which are bolstering consumption and economic activity.
Key Growth Drivers
Improvements in consumption, especially within the consumer discretionary segment, are expected to fuel this growth. Government capital expenditure, which saw a pause post-elections, is now ramping back up, providing a further stimulus. Financial services are identified as a primary engine for this recovery, with both fund-based and non-fund-based business segments contributing substantially.
Sectoral Performance Outlook
The information technology (IT) sector is also anticipated to see a turnaround after a subdued period, with commentary from companies like Tata Consultancy Services (TCS) and LTIMindtree suggesting a better demand environment ahead. Cement is another sector expected to contribute positively to overall earnings growth as capital expenditure picks up pace.
Investment Strategy
Agarwal describes the current market as ideal for bottom-up stock picking. Auto ancillary companies are particularly well-positioned, benefiting from robust domestic demand, product diversification, and India's increasing role as an export hub. These firms are expanding through acquisitions, creating potential for wealth creation over the next 12-15 months.
For real estate, a selective approach is advised, favoring large developers with strong balance sheets and a pan-India presence. Commercial real estate, particularly consumption-linked assets like malls, shows promising business updates. Agarwal noted that larger developers are better equipped to navigate the market and deliver growth compared to smaller regional players.
