India Inc’s earnings are likely to be hit more by firm crude oil prices in the backdrop of the West Asia conflict, said analysts Bernstein in a recent report. Earnings downgrades, they said, have resumed with 2026-27 (FY27) estimates being already cut by about 3 per cent so far.
The key swing factor, Bernstein said, is crude: a de-escalation in the US–Iran conflict and a move toward $90 per barrel (bbl) or below would meaningfully ease pressure on earnings—supporting both markets and fiscal math, and allowing capex plans to stay intact.
Conversely, any sustained period of elevated crude risks undermining both the fiscal and current account, Bernstein believes, would eventually feed into earnings growth going ahead. Even without a geopolitical shock, earnings risks, the note said, are skewed to the downside, including in sectors often seen as ‘crude-proof’.
“’We maintain our Nifty year-end target of 26,000 (around 11 per cent upside from the current levels) and retain a Neutral stance,” wrote Venugopal Garre, managing director at Bernstein in a coauthored note with Nikhil Arela.
Earnings momentum
The FY27 earnings momentum, Garre and Arela said, has already slowed down for NSE200 stocks under their coverage – projected at around 10 per cent growth versus the 14 per cent compounded annual growth rate (CAGR) delivered in the last two years.
Only Healthcare and Real Estate are the sectors, it said, where an actual turnaround type of acceleration is expected – of which healthcare is due to a favorable base given FY26 saw a very low 4-5 per cent earnings growth for this sector.
“Since the beginning of this earnings season we have seen the FY27 earnings expectations across NSE200 stocks go down by 3 per cent, which should give rise to some concerns given that the last two quarters have been almost flat (earnings revision post-December quarter results were merely -0.3 per cent, and in the September quarter results season were at -0.2 per cent). Most sectors see a downward earnings revision – with only three sectors: Metals, information technology (IT) and Telecom holding up,” Garre and Arela wrote.
Market strategy
That said, Bernstein has turned more constructive on healthcare and industrials. Healthcare, their analysts said, offers a “resurgence” trade, supported by easing US pricing pressure, reduced tariff uncertainty, and a weaker rupee. Industrials, on the other hand, are increasingly leveraged to the AI/data centre buildout— a theme already driving meaningful differentiation and likely to produce winners over the near-to-medium term.
“In energy, we move to Equal Weight overall but upgrade oil marketing companies (OMCs) to Overweight, as the worst of the crude shock appears behind us and recent fuel price hikes provide a cushion. We retain our Overweight on IT,” the Bernstein note said.
