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<p data-start="81" data-end="231"><span style="font-family: georgia, palatino, serif; font-size: 12pt;">Despite June-quarter results from 36 Nifty 50 companies broadly meeting expectations, brokerage firms remain divided on the earnings outlook for FY26.</span></p>
<p data-start="233" data-end="438"><span style="font-family: georgia, palatino, serif; font-size: 12pt;">Jefferies noted that the Q1 earnings season slightly exceeded expectations, while Kotak Securities flagged continued weakness in consumption, muted demand in IT services, and sluggish loan growth in banks.</span></p>
<p data-start="440" data-end="632"><span style="font-family: georgia, palatino, serif; font-size: 12pt;">The 36 companies, spanning sectors like financials, FMCG, capital goods, IT, pharma, and oil and gas, reported a combined profit of ₹1.44 lakh crore, just above the projected ₹1.43 lakh crore.</span></p>
<p data-start="634" data-end="829"><span style="font-family: georgia, palatino, serif; font-size: 12pt;">Jefferies highlighted that its earnings downgrade ratio has improved sequentially, with 50% of tracked companies facing downgrades compared to the average of 57% over the previous three quarters.</span></p>
<p data-start="831" data-end="1137"><span style="font-family: georgia, palatino, serif; font-size: 12pt;">Banks were a major contributor to the downgrades, particularly large private lenders. Several showed concerns over asset quality and fluctuating net interest margins, prompting 1&ndash;9% cuts in earnings estimates. NBFCs saw stronger AUM and profit growth, although consumer demand commentary remained cautious.</span></p>
<p data-start="1139" data-end="1418"><span style="font-family: georgia, palatino, serif; font-size: 12pt;">Kotak Securities remained negative on the IT sector, citing macroeconomic uncertainty, delayed client decisions, and weak discretionary spending. On the other hand, Jefferies upgraded its IT sector view from &lsquo;underweight&rsquo; to &lsquo;neutral,&rsquo; anticipating a short-term tactical rebound.</span></p>
<p data-start="1420" data-end="1741"><span style="font-family: georgia, palatino, serif; font-size: 12pt;">The Nifty IT index declined by 9.4% in July, making it the second-largest fall this year. The sector is grappling with earnings shortfalls, global tech headwinds, and restructuring challenges related to AI integration. TCS recently announced layoffs of 12,200 mid- and senior-level employees, further indicating pressure.</span></p>
<p data-start="1743" data-end="1985"><span style="font-family: georgia, palatino, serif; font-size: 12pt;">Jefferies expects near-term upside potential due to relatively attractive valuations and strong free cash flow. However, the long-term outlook remains cautious, with single-digit EPS growth forecasts continuing to weigh on investor sentiment.</span></p>
<p data-start="1987" data-end="2192" data-is-last-node="" data-is-only-node=""><span style="font-family: georgia, palatino, serif; font-size: 12pt;">While Kotak predicts further downgrades in earnings across sectors, Jefferies remains hopeful that the September-quarter results will show improvement, supported by a low base and the early festive season.<br><br>[Except for the headline, this article has not been edited by the Benefit News editorial team and is published directly from the IANS news feed]<br></span></p>
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Q1 Results Show Mixed Trends Across Sectors

Brokerages split on FY26 outlook as earnings downgrades ease, IT and banks under pressure

Q1 Results Show Mixed Trends Across Sectors

Brokerages split on FY26 outlook as earnings downgrades ease, IT and banks under pressure

August 3, 2025 | 19:01 IST