Indian companies overall posted better-than-expected earnings for the first quarter of FY27, which led to analysts upgrading their forecasts, but there is a risk of downgrades in the coming quarters, HSBC said in its latest India equity strategy report.Approximately 70% of Indian firms' Q1 results beat or were in line with HSBC’s expectations, with mid caps and small caps leading the way by posting up to 35% YoY growth. Consumption stayed resilient after the GST cuts and RBI easing last year, HSBC further said, adding that firms also rolled out calibrated price increases and, along with inventory gains, these partially offset higher raw material costs.“Overall, the results were better than expected, with the growth recovery holding up well. FY27 estimates have been upgraded for nearly half of companies in FTSE India since June-end,” the brokerage noted. It highlighted that the strong results pushed FY27 earnings upgrades up by 50 bps to 14.3%, led by financials (PSUs and NBFCs).Why earnings downgrade risks loomThat said, HSBC noted that there were consensus downgrades in autos, due to higher commodity prices, and hospitals, following lower margins in new units.“Looking ahead, there’s a risk of downgrades in coming quarters as commodity prices stay elevated, while the lift from GST cuts and inventory gains fade. The impact of further price hikes on demand is another risk,” HSBC said.Which sectors performed the best and worst?Materials, industrials and financials drove overall growth, while energy and tech were the key laggards, HSBC said. It added that margin compression was noted in industrials, autos, durables and hospitals, while jewellery, paints, ferrous metals and cables and wires held up better.“FY27 earnings estimates stand at 14.3%, led by financials (PSUs and NBFCs). We remain neutral on India from a regional perspective,” it concluded.Notably, several analysts have highlighted resilient Q1 earnings. Ratings agency ICRA said India’s corporate earnings cycle kicked off FY27 on a stronger-than-expected note, with aggregate revenues of 838 listed companies in its sample growing 22% year-on-year in Q1.This is sharply higher than the 13% YoY growth reported in Q4 of FY26. ICRA said this was driven by commodity and bullion price-led value inflation, demand lift from the GST rate cuts last year that continued to spur the automobile sector, and resilient overall consumption volumes, despite the West Asia flare-up and El Niño worries.Also read | Q1 earnings show resilience as demand, cost headwinds prove less severe than expected: ICRAMotilal Oswal Financial Services also said that Nifty companies have delivered a stronger-than-expected start to the first-quarter earnings season.The brokerage said that the growth has outpaced its expectation of 7% and reiterated its top Nifty picks, including Bharti Airtel, SBI, ICICI Bank, M&M, Titan, Eternal, Shriram Finance, Bajaj Finance and InterGlobe Aviation, its said in its August strategy note.Also read | Nifty Q1 earnings grow 11% to beat estimate, says Motilal Oswal; picks Bharti Airtel, SBI, ICICI Bank among top bets(With inputs from agencies)(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)