Indian companies posted their fastest revenue growth in nine quarters, but weaker banking, IT and pharmaceutical results are concentrating the gains in a narrower group of industrial and consumer sectors.
India’s latest corporate earnings season is pointing to another quarter of broad-based growth, but the gains are unevenly spread. According to The Economic Times, the September quarter so far has delivered a strong rise in revenue and profit across a sample of 357 companies, helped by heavyweights in capital goods, metals, consumer durables, chemicals and auto ancillaries. At the same time, banking, information technology and pharmaceuticals have lagged behind, underscoring how sector-specific headwinds continue to shape the corporate scoreboard.
The early numbers show why analysts had expected a solid quarter. Revenue among the companies in the sample rose 22.1% from a year earlier, the fastest pace in nine quarters, while net profit climbed 27.5%, well above the 9.7% increase recorded in the June quarter, according to The Economic Times. A lower comparison base helped, but the underlying picture was also supported by stronger demand in several industrial and consumer-facing businesses. Elara Securities said at the start of the results season that 13 of 18 sectors were on track to post double-digit sales growth, led by autos, consumer discretionary names, industrials and non-bank financial services.
Banks, however, continue to weigh on the aggregate picture. The Economic Times said operating margin for the full sample fell 150 basis points to 20.8% because of weakness in banking profitability, with net interest margins still under pressure. Excluding lenders, margins improved slightly, while revenue and profit growth were stronger. The share of banking and finance in total revenue and profit also fell from a year earlier, showing how much the sector’s relative contribution has shifted even as it remains central to the market’s earnings base. Business Standard separately reported that banks and finance companies accounted for 46.5% of corporate earnings in the second quarter of 2023-24, even as the IT sector’s share slipped to a five-year low.
The weakness in IT is tied to slower decision-making by clients, who are taking longer to commit to new projects as they assess the impact of artificial intelligence on their businesses, according to The Economic Times. Pharmaceuticals also showed slower year-on-year growth than in the previous quarter. That contrasts with pockets of strength elsewhere in the market. Mint reported that Nestlé India delivered its fifth straight quarter of double-digit growth across product groups, while Reliance Industries posted a 30% rise in net profit and Tata Consultancy Services still managed profit and revenue growth, albeit more modestly than the broader market. Together, the results suggest that India’s earnings cycle remains resilient, but increasingly dependent on a narrower set of outperforming sectors.
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