Metal and Oil & Gas stocks shine in Q2FY26; Bank, IT and Auto shares show resilience

Q2FY26 earnings have almost wrapped up for the season, with nearly 3,500 companies declaring their quarterly results. At the broad level, NIFTY50 earnings recorded strong double-digit profit growth for the quarter due to strong domestic tailwinds. Key consumer-oriented sectors like Auto, FMCG, and consumer durables witnessed short-term challenges led by GST implementation. However, the outlook remains positive despite global headwinds like tariffs. At the sectoral level, Banks, Metals and Oil & Gas companies reported strong outperformance, while FMCG companies showed modest single-digit growth.

Information Technology

Amid the challenging environment and sectoral headwinds, the IT sector posted steady sequential growth. According to ACE Equity data, the aggregate sales growth for 10 companies in the NIFTY IT index reported 4.4% QoQ growth and 6.4% YoY growth. Strong currency tailwinds, delayed salary hikes and modest headcount growth led to increasing operational income.

The aggregate EBITDA (excluding other income) grew by nearly 7% YoY and QoQ, respectively. The large-cap IT names posted better-than-expected Q2 results. Companies like Infosys, TCS, HCL Technologies and Wipro posted 2%-5% sequential sales growth. However, mid-cap IT names like LTIMindtree, Coforge, and Persistent Systems outperformed their large-cap counterparts, posting 7%-10% sales growth.

(Source: Company filings)

Banks

The banking sector showed mixed performance between private and public sector banks. Private banks like HDFC Bank, ICICI Bank and Kotak Mahindra Bank posted 4%-7% growth in net interest income. Meanwhile, Axis Bank posted a modest net interest income growth of 2%. On the other hand, the public sector banks, like State Bank of India, Canara Bank and Bank of Baroda, posted 2-4% YoY growth in net interest income. However, on the bottom-line front, lower provisioning led to superior profitability growth for public sector banks at 8.5% versus -0.2% YoY growth for private sector banks.

HDFC Bank and ICICI Bank posted 10.5% and 5.2% YoY net profit growth, respectively, while Axis Bank posted a 26% YoY decline in the same period. At the same time, SBI and Canara Bank reported 8-10% net profit growth. All the major public sector banks like SBI, Canara Bank, Bank of Baroda posted greater than 10% credit growth during the quarter, while ICICI Bank, HDFC Bank, Axis Bank posted credit growth in the range of 9-12%.

Source: Company Filing

In summary, the banking sector showed resilience with steady income and balance sheet growth, with stable asset quality and moderate provisioning.

Automobiles

The auto sector witnessed strong demand traction in the tail end of the quarter, owing to the new GST rates effective from 22 September. Festive demand and GST rationalisation impact led to strong demand for Tata Motors and M&M, which posted over 10% growth in volumes for the quarter. While Maruti Suzuki and Hyundai posted modest volume growth of 1.7% and 0.5% YoY, respectively, the postponement of purchases due to GST reforms affected their volumes.

Meanwhile, the two-wheeler companies posted record sales growth for the quarter, led by festive demand and GST reforms. TVS Motors, Eicher Motors (Royal Enfield) and Bajaj Auto all witnessed strong double-digit volume growth.

At the aggregate level, NIFTY Auto’s net sales for the quarter jumped by 15% YoY, owing to traction in sales led by festive demand. While the operating profit (EBITDA) and profit after tax grew by 15% and 12.2% YoY, respectively, on a consolidated basis for the quarter.

(Source: Company filing)

FMCG

Fast-moving consumer companies also showed resilience in earnings amid lower inflation and a rate cut induced consumerism. Additionally, GST rate cuts also boosted consumer sentiments. At an aggregate level, the NIFTY FMCG’s net sales for the quarter grew by 4.07%. The recovery in urban markets has improved topline sales growth for major FMCG companies. At the operational level, the EBITDA grew by 3.1% YoY and profit after tax grew by 4.8% YoY for the Q2FY26.

Key FMCG companies like Nestle India, Hindustan Unilever, Dabur, and Britannia posted topline growth of 4% to 10%, except for ITC, which posted a subdued growth of -1.3% YoY for the quarter. Management commentary across the FMCG spectrum remained buoyant and indicated signs of recovery in volumes; some companies like Britannia Industries also see double-digit growth in growth on the cards in due course. At the operational level, de-stocking due to GST reforms led to some margin impact and topline, but benign inflation levels helped EBITDA to grow by 3.1% YoY for Q2FY26 vs 0.78% YoY growth in Q1FY26.

(Source: Company filings)

Oil & Gas

Oil & Gas stocks have been major outperformers in 2025 with strong sectoral tailwinds for support. Additionally, the NIFTY Oil & Gas index has rallied nearly 14% in 2025, outperforming the benchmark indices in the same period. According to Ace equity data for Q2FY26, the aggregate level, the NIFTY Oil & Gas index’s net sales for the quarter grew by 4.2% YoY. On the operating front, the margins showed strong growth of 42% YoY for the NIFTY Oil & Gas segment, with strong marketing margins for oil marketing companies like Bharat Petroleum, Hindustan Petroleum and Indian Oil Corporation, while upstream companies like ONGC were impacted by lower crude oil prices.

At the company level, Reliance Industries’ Exploration & Production business posted a 2.4% drop in revenue and the Oil to Chemicals business reported a 3.2% rise in revenue. While Oil marketing companies like BPCL, HPCL and IOCL posted the topline growth of 2-4% YoY. Their EBITDA growth stood in the range of 8-10% YoY for the September quarter.

Source: Company filings

Metals

Metals were in the shining spot in the Q2 earnings season as key companies like Tata Steel, JSW Steel posted strong turnarounds at the bottom-line level. At the global level, the steel prices moderated in Q2FY26 and muted demand due to tariff impacts. However, the Indian domestic steel demand remained resilient due to government spending and stimulus measures.

While the mining companies showed steady growth, led by a rally in global mining prices. At the aggregate level, NIFTY Metal Index posted a revenue growth of 9.9% YoY owing to strong price realisations for the quarter. The EBITDA for the quarter for 15 companies in the NIFTY Metals index jumped 18.9% YoY, the highest in the previous four quarters. The net profit jumped 26% YoY for the quarter.

At the company level, Tata Steel, JSW Steel posted a positive turnaround in the bottom line. While Mining companies like NMDC, Hindustan Copper, Hindalco and others posted high double-digit growth in the net profit for the quarter.

(Source: Company filing)

In conclusion

At the broad level, Q2 earnings posted a resilient show across the sectors, with key short-term challenges. Management sentiment also remains buoyant for the coming quarters, as the GST reforms, low inflation and potential rate cuts could spur the much-needed momentum in earnings. Additionally, a good and balanced trade deal with the US could elevate the hopes for good earnings growth further.