Amidst the ongoing West Asia conflict and persistently high crude oil prices, analysts are significantly trimming India Inc's financial year 2026-27 (FY27) earnings growth forecasts, signalling potential headwinds for corporate financial performance.
Key Points
- Analysts have begun trimming FY27 earnings growth forecasts for India Inc, attributing the revisions to firm crude oil prices exceeding $100 a barrel due to the West Asia conflict.
- The rise in crude oil and gas prices is not yet fully priced in and is anticipated to negatively impact India Inc's financial performance over the next two quarters, subsequently affecting overall FY27 numbers.
- Initial expectations of 10-12 per cent earnings growth for FY27 could be revised down to 6-10 per cent if the West Asia situation prolongs, according to Andrew Holland of Nippon India Asset Management.
- JPMorgan has also flagged risks to corporate earnings growth, revising down its FY27 earnings estimates by 2-10 per cent across sectors like consumer, auto, financials, and OMCs, expecting supply disruptions and elevated costs to persist.
Analysts have started to trim financial year 2026-27 (FY27) earnings growth forecasts for India Inc amid firm crude oil prices that continue to rule above $100 a barrel (bbl).
The rise in crude oil and gas prices as a result of the West Asia conflict, they say, are not fully priced in, and are likely to dent the financial performance of India Inc in the next couple of quarters.
This, in turn, they feel, will dent the overall FY27 numbers.
Impact of Geopolitical Tensions on Earnings
Before the conflict, Andrew Holland, head – new asset class, Nippon India Asset Management, for instance, expected around 10-12 per cent earnings growth, with potential upside into FY27.
"If the situation (in West Asia) resolves quickly, there might be a one-quarter blip, but we should return to that 10-12 per cent trajectory.
"If it drags on, earnings growth expectations could be revised down to around 6-10 per cent," he said.
The combined net profits (adjusted for exceptional gains & losses) of 141 companies that announced their results for the fourth quarter of 2026-27 (Q4FY26) till end of last week were up 14 per cent year-on-year (Y-o-Y), growing at the fastest pace in the last 10 quarters, showed a Business Standard analysis.
The companies' net profits (adjusted for exceptional gains & losses) showed a modest 1.7 per cent growth in Q4FY25, after increasing 8.6 per cent Y-o-Y in Q3FY26.
Crude Oil Volatility and Future Outlook
Crude oil, meanwhile, continue to trade around $107/bbl, rising nearly 2 per cent on Monday amid stalled peace talks between the US and Iran. US President Donald Trump on Saturday cancelled a planned trip to Pakistan by his envoys Steve Witkoff and Jared Kushner.
Oil prices, Holland said, could remain elevated — possibly $90-100/bbl — depending on whether the Strait of Hormuz remains disrupted.
"There are too many moving parts for a definitive answer right now. If the Strait reopens, oil prices could fall quickly.
"But the impact on earnings will take time to reflect, likely affecting one quarter before normalising," he said.
Those at JPMorgan, too, have flagged risks to corporate earnings growth in FY27 in the backdrop of the West Asia conflict.
They expect supply disruptions and elevated costs to persist for a few months despite the ceasefire, with normalisation of energy flows likely to take another three to four months.
JPMorgan has revised down its FY27 earnings estimates by 2-10 per cent on a weighted-average basis over the last few weeks across sectors such as consumer, auto, financials, and oil marketing companies (OMCs).
