Smallcaps Struggle in Q4—Miss Estimates at Nearly Double the Rate of Largecaps!

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A JM Financial report has revealed a stark contrast in earnings performance between smallcap and largecap companies in Q4 FY25. While 31% of smallcaps failed to meet expectations, only 17% of largecaps missed their estimates, highlighting deeper financial stress among smaller firms.

Key Highlights:

- Smallcaps underperform—31% missed earnings estimates, compared to 17% of largecaps.
- Midcaps also struggled, with 28% failing to meet projections.
- Nifty50 earnings grew 4.9% YoY, beating JM Financial’s earlier forecast of a 2.2% decline.
- Sectoral divergence—Metals & Mining surged 33.2% YoY, while IT, Oil & Gas, and Consumer sectors saw declines.
- EPS estimates cut—FY26 growth revised down to 12% from 16.4%, FY27 to 14.3% from 15.1%.

Despite strong index-level earnings, JM Financial noted polarization within corporate India, with smallcaps facing greater volatility. The Automobile, Cement, Oil & Gas, and NBFC sectors were identified as earnings laggards, prompting downward revisions in FY26 and FY27 projections.

However, Telecom, Metals & Mining, and Banking are expected to lead the recovery, with EPS growth forecasts of 73%, 23%, and 7% respectively. Investors are now closely watching sectoral trends to gauge future market movements.

Sources: MSN News, Live Mint, Economic Times