Following a period of subdued growth, India Inc. is gearing up for a potential earnings revival, with Jefferies identifying key sectors poised for rapid expansion in FY27. The brokerage firm anticipates an upturn in the Indian market starting in the second half of FY26, extending through FY27, driven by a combination of a low base effect and ongoing government policy support.

Jefferies projects that MSCI India earnings will grow by 16% in FY27, a 6% acceleration compared to the previous year. This anticipated resilience suggests that earnings downgrades may be minimal, potentially marking one of the "best years" for the market. The brokerage is confident that India Inc. can achieve a 13-15% growth in FY27 EPS, which could attract capital and sustain market momentum.

According to Jefferies, the cement and telecom sectors are expected to demonstrate the strongest and most stable EPS growth over the forecast period. Cement is projected to lead with approximately 34% earnings growth, fueled by stabilizing volumes, softening input costs, and improved capacity utilization. The telecom sector is expected to follow, with an estimated 25% earnings surge, benefiting from industry consolidation and tariff discipline.

Jefferies' normalized view shows Airtel delivering about 74% profit growth in FY26 and 37% in FY27. For Indus Towers, normalized growth stands at 14% in FY26 and 7% in FY27. With these adjustments, Airtel and Indus form the backbone of next year's telecom earnings improvement, according to the brokerage.

Besides cement and telecom, cyclically sensitive sectors such as autos, banks, power, and consumer segments also hold significant potential for positive earnings swings. The firm projects a cleaner rebound in the auto sector in FY27, with leading companies like Maruti Suzuki and Samvardhana Motherson expected to post sharper growth due to low comparables and smoother supply chains. Maruti's profit is estimated to increase by around 18% in FY27, compared to roughly 8% in FY26, while Motherson's growth is projected to rise from low single digits to approximately 30%. Banks are also positioned for steadier growth as pressure on margins eases.

Jefferies believes that the FY26 growth appears understated due to temporary disruptions in select sectors, such as banks and power. They also noted that consumer and auto sectors are likely to see the full benefit of GST rate cuts next year. Revenue growth for non-commodity sectors is expected to stay in the 13-14% range for both FY26 and FY27.

While sectors like IT continue to face growth challenges, Jefferies maintains a selective approach to IT stocks, with a preference for mid-sized firms like Coforge and Sagility.

Overall, Jefferies anticipates a positive outlook for India's corporate earnings, with growth expected to accelerate from the second half of FY26 through FY27. This recovery is expected to be driven by a combination of factors, including easing sector challenges, government policy support, and a low base effect.