Midcaps and smallcaps stole the show as broad-based revenue growth returned across the board. SBI Capital Markets breaks it down.
India’s corporate earnings season for the third quarter of FY26 has come in stronger than anticipated with recovery spreading across market-cap segments rather than being confined to a handful of large-cap names. According to a results review by SBI Capital Markets, the quarter marked a decisive turn in earnings momentum — one that analysts had been waiting for through much of the year.
The Numbers
SBI Capital notes that “the earning season for 3QFY26 turned out to be strong with broad-based recovery in the earnings” — with all market-cap segments posting double-digit revenue growth. Nifty 50 companies, excluding Tata Motors PV and IndiGo, registered 11.6% year-on-year revenue growth. Nifty Midcap 150 delivered a solid 12.4% YoY, while the broader NSE 500 universe came in at 10.3% YoY.
On profitability, the picture is even more encouraging. Nifty 50 companies posted reported PAT growth of 12.2% YoY, reaching Rs 2.1 trillion in aggregate. Midcaps outpaced their larger peers on the bottom line — Nifty Midcap 150 companies reported PAT growth of 17.7% YoY to Rs 0.8 trillion. The NSE 500 universe posted PAT growth of 16.1% YoY to Rs 4.2 trillion.
Within the Nifty 50, SBI Capital flags Tata Steel, JSW Steel, Titan, M&M, L&T, SBI, Hindalco, Adani Ports, Sun Pharma, TCS, and Shriram Finance as the top contributors — both in absolute numbers and percentage growth. On the other side of the ledger, Tata Motors PV, ICICI Bank, Bajaj Finance, Cipla, IndiGo, Adani Enterprises, Coal India, NTPC, and Wipro dragged on overall Nifty 50 PAT growth.
Midcaps: The Real Story
The midcap outperformance was the defining feature of the quarter. SBI Capital points to strong profitability growth in Oil & Gas, Metals, Auto, Capital Goods — particularly cables, electric products, and projects — and select consumption and IT names. Top positive contributors in the Nifty Midcap 150 universe included HPCL, GIC Re, Lupin, Waaree Energies, Ashok Leyland, Hero MotoCorp, Lloyds Metals & Energy, and Nalco. Vodafone Idea, Swiggy, and NHPC were among the detractors.
Scorecard
SBI Capital’s sectoral breakdown offers a clear hierarchy for the quarter. Oil & Gas, IT excluding exceptional expenses, Automobiles excluding Tata Motors PV, Metals and Mining, Healthcare, Capital Goods, Wires and Cables, Hotels, and Cement all delivered strong results. BFSI, Cement, and FMCG posted decent numbers. Power, Aviation, Telecom — weighed down by an exceptional gain in the base quarter — and Textiles came in muted.
Rural demand showed revival following GST 2.0 rationalisation, driving volume recovery in consumer staples. Defence, Capital Goods, and EPC companies saw order inflows that came in better than expected. In banking, a CRR cut and festive-season retail loan uptick drove healthy credit growth. Auto volumes, stripped of the Tata Motors PV drag, were strong as the full benefit of GST cuts flowed through.
The Macro Backdrops
The strong earnings season is unfolding against a complicated global backdrop. SBI Capital notes that “robust domestic inflows have served as a crucial support, helping to mitigate the effects of ongoing FII withdrawals, promoter sell-offs, and paper supplies through IPOs.” India has also entered significant trade agreements with both the United States and the European Union, though the report flags that the US agreement is currently under review following a Supreme Court ruling that declared tariffs unconstitutional — leaving global trade operating under a residual 15% tariff.
Geopolitical risk adds another layer. Middle East tensions have already pushed crude oil above $80 per barrel. The report warns that any prolonged disruption in the Strait of Hormuz — through which 20% of the world’s crude supply passes — could keep energy prices elevated, pressure inflation, and delay interest rate cuts globally.
What to Watch
Despite the external noise, SBI Capital’s outlook for the coming quarters remains constructive. The report anticipates “robust growth” from Automobiles, Telecom, Hotels, Cement, Construction, Defence, BFSI, Consumer Goods, and select Metals and Mining names. The earnings recovery, if it sustains, would give domestic equity markets a fundamental floor even as foreign flows remain volatile.
