ET Intelligence Group: In a quarter affected by the labour code changes, which pulled down the operating profitability of companies by 200-300 basis points, select consumer facing sectors fared better amid festive demand and
GST rate cuts. A sectorwise review of the December quarter results season so far reveals that select companies from
automobiles,
banking and finance, cement, and pharma companies reported buoyant performance. In the coming quarters, trend in rural demand, progress on the US tariff related measures and raw material prices will be crucial factors to watch for.
Automobiles
Hits: GST rate cuts boosted sales volume for the sector. Maruti Suzuki India reported industry beating 22% year-on-year jump in the domestic passenger vehicles volume. Tata Motors expanded domestic passenger vehicles (PV) market share to 13.8% from 12.8 in the previous quarter.
Misses: High input costs including copper and aluminium prices affected profit margins of companies. Tata Motors reported consolidated net loss amid weaker performance of the UK subsidiary.
Outlook: Two-wheeler demand has remained firm in the first half of the March quarter driven by marriage season and rural offtake. Tractor sales, too, have remained strong. However, the traction seen in the entry-level small cars after the GST rate cut seems to be ebbing gradually. In addition, discounts have remained elevated for electric vehicles. New model launches hold key to top line growth.
Revenue change (YoY): -12%
Net profit change (YoY): -56.2%
Banking
Hits: Stress pertaining to unsecured loans is waning gradually thereby helping to lift overall asset quality.
Misses: While net interest margin (NIM) showed modest sequential improvement, year-on-year weakness persisted amid slower reset in the case of deposit rates as banks continued to scramble for retail deposits. Also, microfinance related issues persisted as visible from subdued performance of banks having exposure to this segment.
Outlook: Corporate loan demand is picking up once again, driven by rising investments in the green energy and datacentre segments. In addition, demand from housing, micro, small, and medium enterprises (MSME), and reviving momentum in personal, unsecured loans is expected to keep loan growth in double digits for FY27 amid stable asset quality.
Revenue change (YoY): 3.5%
Net profit change (YoY): 9.1%
Cement
Hits: Cement sales volume growth remained in double digits driving the aggregate revenue growth also in double digits year-on-year. Ultratech posted strong growth of around 35% on-year in operating profit before depreciation and amortisation (Ebitda) unlike some peers, driven by strong volume growth and cost optimisation.
Misses: Elevated input costs amid weak pricing affected profit per tonne of some of the top companies. Ambuja Cement and ACC reported lower profits and profitability,
Outlook: Continued focus on capacity enhancement by cement companies amid the government’s rising thrust on infrastructure development augurs well for future growth potential. Also, initiatives taken up by companies to improve process efficiency is likely to support profitability in the medium and long term.
Revenue change (YoY): 14.8%
Net profit change (YoY): 51.1%
Consumer
Hits: Marico, Dabur India and Emami posted 3-9% year-on-year volume growth in the December quarter amid firm rural demand despite inventory disruption in October due to GST rate cuts. Also, tighter cost management and selective price increase helped Dabur and Emami to post 31-34% operating margin
Misses: Marico posted 240 basis point drop in operating profitability to 16.7% year-on-year, affected by higher input costs.
Outlook: A volume led growth is expected in FY27 amid moderating raw material inflation. Dabur India expects to return to 20% operating profitability compared with 18-19% over the past three years. For ITC, cigarette volumes are likely to suffer due to higher taxes; growth in non-tobacco segments will be in focus.
Revenue change (YoY): 13.6%
Net profit change (YoY): 6.9%
Information Technology
Hits: Top companies reported better than expected revenue and profit figures for a historically weak quarter due to holidays. HCLTech reported nine-quarter high new order bookings worth $3,005 million. HCLTech and Infosys raised revenue guidance marginally for FY26
Misses: The scenario for conventional projects remains cloudy amid heightened geopolitical and international trade related uncertainties.
Outlook: Companies are increasing collaborations with global technology partners to address the changing nature of client offerings. The 20-year tax holiday for datacentre business is likely to drive more investments in this segment.
Revenue change (YoY): 9.3%
Net profit change (YoY): -7.5%
Oil and gas
Hits: The consolidated Ebitda margin of Reliance Industries (RIL) crossed double digits for the first time in seven quarters amid strong performance from oil-to-chemicals (O2C) division amid higher realisation and domestic sales of fuel products.
Misses: RIL’s retail segment reported weakness due to a shift in festive season compared with the prior year. HPCL’s Mumbai refinery faced crude contamination issue in October, which pulled down the overall refining margin and affected the company’s profitability
Outlook: RIL’s telecom segment is likely to deliver strong performance. Analysts have reduced earnings forecast of GAIL for FY26-28 citing lower marketing margins and weakness in the petrochemicals segment.
Revenue change (YoY): 6.7%
Net profit change (YoY): 48.3%
Pharma
Hits: Sun Pharmaceuticals reported multi-quarter high Ebitda margin for the December quarter, aided by buoyant domestic sales. margin expansion and an increase in market share to 8.3% from 8% year-on-year in the Indian market. Aggregate top line growth remained at around 10% year-on-year for the ninth consecutive quarter.
Misses: The US business was under pressure amid decline in Revlimid volume. Cipla has downgraded the Ebitda margin guidance to 21% for FY26 from 22.75-24%.
Outlook: New offerings will be a key factor for domestic pharma companies. Cipla expects four significant respiratory launches by the end of FY27, including generic Advair and two respiratory drugs. For Dr. Reddy’s Laboratories, a portfolio of biosimilars and GLP-1 offerings provides revenue visibility.
Revenue change (YoY): 12.7%
Net profit change (YoY): 0.8%
