Q1FY26 results preview: After almost four quarters of unimpressive earnings, hopes are high that the Q1FY26 earnings will cheer the Indian stock market up.

FY25 was a mixed year for Indian corporates, with earnings witnessing widespread downgrades. Soft demand and tepid capital expenditure dragged the overall corporate performance during the last financial year.

According to Nuvama Research, the aggregate profit after tax (PAT) of BSE 500 companies (excluding oil marketing companies) saw a modest growth of 10 per cent year-on-year in Q4FY25, and 9 per cent for the full FY25. This was down from a solid 21 per cent growth in FY24.

Will Q1FY26 results be better?

Here are four key factors that indicate Indian Inc.'s performance in Q1FY26 will be better:

1. The low base effect

The Nifty 50 delivered a 4 per cent year-on-year growth in Q1FY25, reporting the first quarter of single-digit EBITDA growth in four years.

Experts believe the low base effect will play its part in Q1FY26.

"Q1FY26 may be a better year-on-year, mainly because of the low base effect. Also, a lot of cyclical sectors, such as metals, oil and gas, are expected to do well," said Pankaj Pandey, the head of research at ICICI Securities.

2. RBI rate cuts

RBI rate cuts are a key indicator that suggests Indian corporate earnings will be better in FY26 than last year.

"The results season for the April to June 2025 quarter will kick in. The larger section of companies is expected to benefit from three successive rate cuts by the RBI. The impact of the first two cuts will be felt on corporates' bottom lines, and this should help in better earnings," said Arun Kejriwal, Founder of Kejriwal Research and Investment Services.

"Revenues or topline growth is expected when the liquidity infused by RBI through the CRR cut of 100 basis points in four tranches of 25 basis points each kicks in to match the festival season," said Kejriwal.

3. Record GST collection

India's gross collection of goods and services tax (GST) hit an all-time high of ₹22.08 lakh crore in FY25, up 9.4 per cent year-on-year, according to an official statement on 30 June.

The record GST collection suggests that India's economic activity remained strong last financial year, which should translate into improved corporate earnings.

4. Easing inflation

India's inflation eased steadily in FY25, averaging around 4.8 per cent. The relatively moderate price rise meant that companies faced less pressure from input cost inflation. This environment likely supported better operating margins, contributing to improved corporate profitability.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.