Indian companies are enjoying a profit revival, with major firms reporting their best earnings in more than a year - powered by easing inflation, tax cuts, and a burst in consumer demand.
India's corporate sector is bouncing back, with analysts forecasting double-digit profit growth through the rest of this fiscal year and looking ahead to 2027. Retail inflation cooled to an ultra-low 0.25% in October, putting more spending power in buyers' pockets, while tax cuts and supportive policies have kept demand running high. Profits for BSE500 companies jumped 16.6% in the September quarter - up from 10.7% in June and reversing last year's slump. Key players were oil marketing, telecom, metals, tech, cement, and capital goods firms, while autos and some banks posted softer results. Nearly half of MSCI India companies topped profit forecasts, and mid-cap stocks set new highs, signaling broad-based strength as optimism spreads across sectors.
India's Nifty 50 index is now just 1% off its all-time high, fueled by strong profits, earnings surprises, and a price-to-earnings multiple that easily tops long-term trends. Roughly 40% of Nifty 50 companies exceeded estimates last quarter, mid-cap stocks hit record highs, and lending-focused financials showed clear signs of a comeback. Still, small-caps have trailed, sitting 7% under their peaks as few earnings beats have come from those smaller firms.
The bigger picture: Economic tailwinds are gaining traction.
Lower inflation, steady tax revenue, and healthy credit growth have bolstered India's corporate outlook and point to ongoing economic strength. A heady start to the festive season gave a big lift to discretionary spending, pushing revenue among tracked firms to a ten-quarter high. As double-digit profit growth looks set to continue, the outlook remains upbeat for Indian businesses and the broader economy alike.