The pressure is unlikely to ease soon. Analysts said the recent US tariff hikes, sluggish global demand, and sector-specific challenges could trigger further downgrades in the coming quarters.
“We see a 3% pro forma risk to our Nifty EPS (Earnings Per Share) estimate of ₹1,160 for FY26, mainly from tech earnings cuts, given that consensus was building in a recovery,” said Seshadri Sen, head of research & strategist, Emkay Global. Metals, a large contributor to the FY26 Nifty EPS, is also now vulnerable as new capacity comes on stream and lower prices could hurt.”
EPS estimates for over a dozen companies – including Biocon, Chennai Petroleum, Sterling & Wilson, Prince Pipes, SAIL, Westlife Foodworld, Allcargo Logistics, JK Paper, and Sobha – have been downgraded by more than 50% in the past three months. 80 companies have seen earnings cut by 20-40%, while around 110 have faced 10-20% revisions.
According to Deven Mistry, analyst at Motilal Oswal Financial Services, the expectations for FY26 corporate earnings are still somewhat elevated given the underlying macro-micro backdrop and are thus ripe for further downgrades.
The December quarter saw Nifty recording a 5% year-on-year profit growth for the third consecutive quarter. Earnings downgrades were led by cyclicals, such as oil & gas companies along with cement, chemicals and consumer.With the US tariffs, export-heavy sectors like IT and auto components are especially at risk, according to analysts.”US tariffs and global slowdown are key headwinds for export-driven businesses,” said Vaibhav Porwal, co-founder, Dezerv. “However, domestic-facing sectors – banking, FMCG, and infra – remain resilient, aided by stable inflation and the prospect of rate cuts.”
Amid the gloom, 180 companies, including KSB, Varun Beverages, PG Electroplast, Blue Jet Healthcare, Awfis Space, Paras Defence, GIC Re, Embassy REIT, Keystone Realtors, V-Mart Retail, Shaily Engineering, and Shoppers Stop – have seen earnings upgrades by analysts.
