(MENAFN- IANS) New Delhi, Nov 24 (IANS) Indian companies delivered their "best quarter since September 2023," with latest results indicating that the recent run of "earnings downgrades might be over", a report said on Monday.

As many as 69 per cent of firms either beat or met expectations, with total sales up 6 per cent year‐on‐year, the report from HSBC Global Investment Research said, adding that it "supports our overweight on Indian equities."

Supported by lower inflation, rate cuts and income tax moderation, the firm cited a consensus estimate of 10 per cent earnings growth in FY26 and 14 per cent in FY27.

Financials are the biggest contributor to the recovery, as margins have bottomed and signs of an uptick in loans are now visible, the report said.

In Q2 FY26, net profits of the companies rose 13 per cent year‐on‐year, while excluding commodities and one‐offs, net income grew 8 per cent, marking the sixth consecutive quarter of single‐digit growth.

Bank profits moderated on net interest margin (NIM) pressure, but credit cost came down, when large banks surprised on upside, leading to a slight upgrade in FY26 earnings.

Consumer goods firms were impacted by GST disruptions, but many saw margin recovery, while IT firms outperformed aided by a weaker currency and is poised for demand recovery, the research firm said.

Cement and paint firms benefited from weaker competition in the sector, the pharma sales were strong, while hospitals faced margin pressure.

After a year of EPS downgrades, FY26 earnings forecasts are now seeing modest upgrades led by oil and gas, property, tech and financials, the firm said, adding that "the worst is over".

It highlighted consensus downgrades in some consumer services, healthcare and FMCG names. Management across sectors including banks, tech, consumers, cement and autos signalled a recovery in the upcoming quarters, it noted.

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