India Inc.’s earnings in Q3 FY26 showed resilience, with small-cap companies leading the growth, according to a report by Equirus Securities. Small caps recorded a strong 22% year-on-year earnings surge, surpassing mid-caps at 15% and large caps at 14%, indicating a broadening recovery in corporate earnings. Revenue increased by 10% YoY, with EBITDA and PAT rising by 14% and 15% respectively, exceeding market expectations across companies covered in the report.
Around 36% of companies experienced earnings per share (EPS) upgrades, reflecting improved business fundamentals and demand resilience in various industries. Sectors like auto, banks & NBFCs, consumer durables, FMCG, and IT led the upgrades, while downgrades were more prevalent in building materials, cement, infrastructure, chemicals, realty, and retail. The trend suggests a growing investor confidence and enhanced forward earnings visibility across different market capitalization segments.
The report also noted an increasing trend of firms from tier 2 and tier 3 cities entering the capital markets to expand and scale their businesses. Ajay Garg, Managing Director of Equirus group, highlighted this shift, emphasizing the growth aspirations of founders. Looking ahead to Q4FY26, key factors to monitor include the pace of NHAI order awards for construction firms, the demand cycle for consumer durables in the summer season, US market dynamics, and RBI rate decisions affecting BFSI NIM trajectories, as mentioned by Maulik Patel, Director & Head of Research at Equirus Securities.
Price hikes and demand momentum in the cement sector are expected to provide near-term support, although new capacity additions might impact utilization rates. Logistics sector growth is bolstered by EXIM recovery and improvements in Dedicated Freight Corridor (DFC) connectivity. In Q3, financial services companies demonstrated steady asset quality trends and loan growth, while consumption-linked sectors benefited from improving discretionary spending patterns. Electronic Manufacturing Services (EMS) and IT firms maintained deal momentum and execution strength, supporting positive earnings outlooks.
