2 hrs ago
Small and Mid-Caps Seen Outpacing Large Caps in Q2FY27 Earnings
J.P. Morgan expects smaller and medium-sized companies in India to grow their profits faster than the biggest companies in the September quarter.
It thinks spending on construction, manufacturing and AI-related data centres will help these firms.
Demand at home and stores preparing for the festive season may also support sales.
But companies are paying more for materials, fuel, shipping and packaging, which can reduce profits.
Some industries may do better than others.
IT services and cement are expected to remain weak.
J.P. Morgan is positive on several sectors, including banks, healthcare and industrials, but less positive on IT.
It also warned that food prices, rainfall, global tensions and AI-related price pressure could affect results.
J.P. Morgan expects domestic small- and mid-cap firms to outpace large caps in earnings growth during the September quarter.
It forecasts Nifty 50 earnings growth of 17% year-on-year and 16% net-profit growth for companies it covers.
Revenue growth for covered companies is projected to rise to 20% from 19% in the preceding quarter.
Higher raw-material, fuel, freight and packaging costs are expected to pressure profitability, with EBITDA margins forecast to contract 121 basis points year-on-year.
The brokerage favors financials, consumer discretionary, industrials, healthcare and materials, while remaining underweight on information technology.
- Who
- J.P. Morgan and the domestic small-, mid- and large-cap companies covered in its research report.
- What
- The brokerage expects small- and mid-cap firms to outperform large caps in earnings growth in the September quarter.
- Where
- India.
- When
- The second quarter of the 2026–27 financial year; the report was published October 10, 2026.
- Why
- Capital expenditure, modern manufacturing and AI-led data-centre investment are expected to support smaller firms, while domestic demand and festive inventory building may help growth.
Growth supports
Risks and pressures
Small- and mid-cap outlook
Growth supports
J.P. Morgan says small- and mid-cap firms are better positioned to benefit from capital expenditure, modern manufacturing and AI-led infrastructure investment.
Risks and pressures
The report warns that higher input costs and several economic and geopolitical risks could weigh on profitability and make results uneven.
Revenue and profit growth
Growth supports
Resilient domestic demand, festive-season inventory building and favorable pricing in some commodity-linked sectors are expected to support double-digit growth.
Risks and pressures
Rising raw-material, fuel, freight and packaging costs are expected to pressure margins; some sectors may see strong revenue fail to translate into comparable profit growth.
Key facts
- Nifty 50 earnings growth forecast
- 17% year-on-year
- Net-profit growth forecast for covered companies
- 16%
- Revenue growth forecast
- 20%, up from 19% in the preceding quarter
- EBITDA margin forecast
- A 121-basis-point year-on-year contraction
- Overweight sectors
- Financials, consumer discretionary, industrials, healthcare and materials
- Underweight sector
- Information technology
- Publication date
- October 10, 2026
Sources
Related news
India Inc Seen Posting Strong September-Quarter Earnings Despite Cost Pressures
'Mid- and Small-Cap Stocks Look Pricey,' Kotak Analyst Warns
Motilal Oswal Adds Meesho, PhysicsWallah, Shifts 400 Basis Points
Indian Equities May Re-Rating as Earnings Momentum Builds
Singhania Sees Capex Strengthening as External Uncertainties Ease
Accenture Results Split Views on Indian IT Growth Outlook
NPCI Chief Dilip Asbe Joins Swift’s New Supervisory Board
Dimon Says Electricity Is AI Data Centres’ Biggest Challenge
IEA Speeds Oil Reserve Releases as Markets Weigh Supply Risks
Titan and Prime Focus Fall as Other Stocks Climb
