Despite tailwinds from a forecast of above-normal monsoon rains, easing oil prices and a sharper-than-expected rate cut by the Reserve Bank of India, InCred flagged a widening gap between macro hopes and actual earnings performance. For the March 2025 quarter, Nifty-50 companies posted just 5% year-on-year growth in profit after tax, with earnings falling short of Bloomberg consensus by 1%.
“EBITDA growth, ex-BFSI sector, was healthy at 20% yoy, driven by retail, telecom and capital goods sectors,” the brokerage said, but noted continued declines in the cement sector and subdued results across automobiles, FMCG, IT, and power. This has led to a 2% cut in the FY26 consensus EPS forecast for the Nifty-50.
High-conviction changes: Additions and Exits
Camlin Fine Sciences was added with an ‘Add’ rating, with InCred citing “stabilization of its vanillin plant and the imposition of antidumping duties on vanillin in the U.S.” as key triggers for a stronger profit outlook. Mid-sized banks were given an ‘Overweight’ rating, with the brokerage expecting improved liquidity to reduce funding costs.
At the same time, InCred removed Adani Ports from its list, saying “we book profit as its market price is now close to our target price,” and dropped Cipla from the list due to “near-term margin pressure stemming from its product mix.”
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Technical indicators continue to support UPL, Skipper, and Petronet LNG, which remain on the radar as momentum plays, the brokerage said.
Valuations at historical mean, upside limited
The brokerage raised its bull-case probability to 35% from 25% earlier and increased its Nifty50 March 2026 target to 25,142, just a 1% upside from current levels. “The sustained rise in Nifty-50 index in the last three months has lifted forward P/E valuation to a 10-year mean level,” InCred noted, cautioning that most macro positives may already be priced in.
Sector divergence widens
While telecom, FMCG, utilities and commodity stocks saw earnings upgrades, the brokerage highlighted cuts across IT, consumer discretionary, industrials, and BFSI sectors. Major double-digit EPS upgrades in the broader Nifty200 universe were seen in SAIL, Power Finance Corporation, InterGlobe Aviation (IndiGo), Mahindra & Mahindra, and BPCL.InCred concluded that “macro hopes yet to reflect in earnings,” reinforcing the need for a stock-specific approach as headline indices near valuation ceilings.
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