India's Nifty 50 companies have seen their contribution to India Inc's overall earnings drop to a 21-quarter low in Q4FY26, reflecting persistent struggles with earnings growth despite an improvement in broader corporate performance.
Key Points
- Nifty 50 firms' share in India Inc's combined adjusted net profit fell to 47.1 per cent in Q4FY26, the lowest in 21 quarters.
- The combined net profit of Nifty 50 companies grew by only 4.5 per cent year-on-year in Q4FY26, marking an eighth consecutive quarter of single-digit growth.
- Key sectors like BFSI, FMCG, and IT services, which have a 60 per cent weightage in the Nifty 50, are struggling with low single-digit earnings growth.
- Despite poor earnings, Nifty 50 companies saw a 12-quarter high in revenue growth at 11.4 per cent year-on-year in Q4FY26.
- Margin contraction due to higher raw material prices led to a nearly 220 basis point decline in the Ebitda margin for Nifty 50 companies.
India's top listed companies seem to find little respite as they continue to struggle with poor earnings growth, even as there has been an improvement in overall corporate earnings in recent quarters.
As a result, there has been a steady decline in the Nifty 50 firms' contribution to the overall earnings of India Inc.
In fact, the Nifty 50 firms' share in the combined adjusted net profit of all listed companies declined to 47.1 per cent in the March quarter of 2025-26 (Q4FY26), from 51.8 per cent a year earlier and 49.8 per cent in Q3FY26.
This is their lowest share in at least 21 quarters.
Nifty 50's Declining Contribution
At their peak in the December 2022 quarter (Q3FY23), the Nifty 50 firms accounted for 58.3 per cent of the combined adjusted earnings of all listed companies in the country.
The combined net profit (adjusted for exceptional gains and losses) of Nifty 50 companies was up just 4.5 per cent year-on-year (Y-o-Y) in Q4FY26, marking an eighth consecutive quarter of single-digit growth.
The trend is worrying, given that the 4.5 per cent growth comes off a very low base of 2.9 per cent growth recorded in the March 2025 quarter.
After a slight pickup in Q3FY26, there were hopes the income-tax rate cuts in February 2025 and GST rate cuts in September 2025 would improve things.
Broader Market Outperforms
In comparison, the combined adjusted net profit of all 3,081 listed companies (excluding their listed subsidiaries) in the Business Standard sample grew by 15.1 per cent Y-o-Y in Q4FY26, picking up from 9.2 per cent Y-o-Y growth in Q4FY25.
The combined adjusted net profit of Nifty 50 companies inched up to Rs 2.23 trillion in Q4FY26, from Rs 2.14 trillion a year ago and Rs 2.04 trillion in Q3FY26.
The combined adjusted net profit of all listed companies in the sample grew to around Rs 4.74 trillion in Q4FY26 from around Rs 4.12 trillion a year ago and around Rs 4.09 trillion in Q3FY26.
The Nifty 50 companies' reported net profit grew even more slowly at 0.9 per cent Y-o-Y in Q4FY26, lower than the 13.5 per cent Y-o-Y growth recorded in the year-ago period, though it showed some improvement from the 0.3 per cent Y-o-Y decline in Q3FY26.
The combined adjusted net profit of Nifty 50 companies, excluding banks, financial services and insurance (BFSI) as well as oil and gas companies, was up just 2.7 per cent Y-o-Y in Q4FY26, slowing from 7.4 per cent Y-o-Y growth in Q4FY25 and 5.7 per cent Y-o-Y growth in Q3FY26.
Revenue Growth vs. Earnings Challenges
The index companies, however, improved their performance in terms of revenue growth.
The combined net sales (gross interest income for banks and non-bank lenders) growth of Nifty 50 companies was at a 12-quarter high of 11.4 per cent Y-o-Y, in line with the 11.4 per cent Y-o-Y growth in the combined net sales of all listed companies during the recently concluded quarter.
The combined net sales of Nifty 50 companies grew to around Rs 20.1 trillion in Q4FY26, from Rs 18.04 trillion a year ago and Rs 18.5 trillion in Q3FY26.
The combined net sales of all listed companies in the sample grew to Rs 45.65 trillion in Q4FY26, from Rs 40.99 trillion a year ago and Rs 42.07 trillion in Q3FY26.
Over the past five years, Nifty 50 companies' revenues have grown at a faster pace than overall corporate revenues, leading to a steady rise in the index companies' share of total revenues.
Nifty 50 companies accounted for 44 per cent of the combined net sales of all listed companies in Q4FY26, up from 42.1 per cent five years ago in the March 2021 quarter.
Sectoral Slowdown and Margin Pressure
Analysts attribute the Nifty 50 companies' poor earnings growth in recent quarters to the slowdown in key sectors such as BFSI, FMCG and IT services.
"BFSI, consumer goods including FMCG, and IT services together have a 60 per cent weightage in the Nifty 50, and all three are struggling with low single-digit earnings growth, adversely affecting the index's overall earnings," says Dhananjay Sinha, co-head, research and equity strategy, Systematix Institutional Equity.
The dichotomy between the index companies' revenue and earnings growth in Q4FY26 can be attributed to margin contraction on account of higher raw material prices.
The Ebitda (earnings before interest, tax, depreciation and amortisation) margin of Nifty 50 companies declined by nearly 220 basis points year-on-year to 29.3 per cent of total income in Q4FY26, compared with 31.5 per cent in Q4FY25.
In contrast, the Ebitda margin for all listed companies declined by just 50 basis points Y-o-Y in Q4FY26.
Nearly a third of the incremental Y-o-Y growth in overall earnings in Q4FY26 was contributed by just five companies, led by Indian Oil Corporation (10.2 per cent), Life Insurance Corporation (7.1 per cent), ONGC (5.9 per cent), NTPC (4.6 per cent) and IndusInd Bank (4.4 per cent).
Among these, only two companies — ONGC and NTPC — are part of the Nifty 50 index.
In the past, a significant share of earnings growth came from sectors such as public sector banks, non-banking finance companies, oil marketing and metals, which now have lower representation in the Nifty 50 index.
