The fourth quarter earnings season wrapped up with a broadly upbeat performance, signalling resilience across key sectors despite macroeconomic uncertainties. Notably, the Nifty posted a quarter of single-digit profit growth.
Motilal Oswal highlighted that large cap companies clocked 10% earnings growth, and midcaps stood out with 19% growth. However, small caps struggled, with earnings dropping 16%. “Five Nifty companies – Bharti Airtel, Hindalco, ICICI Bank, Tata Motors, and HDFC Bank – contributed 137% of the incremental YoY accretion in earnings. Conversely, IndusInd Bank, ONGC, SBI, Kotak Mahindra Bank, and Grasim contributed adversely to the earnings,” Motilal Oswal added.
Q4 Earnings: Brokerage report card
Outlining the trend across Q4 earnings, Motilal Oswal pointed out, “Q4FY25 corporate earnings showcased widespread outperformance across aggregates.” While metals, OMCs, PSU Banks, automobiles, healthcare, technology, and capital goods powered ahead, sectors like oil & gas (ex-OMCs) and private banks dragged overall profitability.
According to Yes Securities, “The Q4FY25 numbers were higher than our expectations on revenues and EBITDA margins front. Despite a beat on headline numbers, PAT missed estimates and on an aggregate level reported a 5% de-growth, unseen in the past 7 quarters.” The brokerage firm added that revenues, during the quarter, were up 7% year-on-year. Margin contraction too was less than estimated.
Emkay Global observed that, on a quarter-on-quarter basis, the healthcare, materials, and industrial sectors registered gains, whereas the consumer discretionary and IT sectors delivered subdued performance.
Nomura Holdings added, “The aggregate PAT growth for this universe was at 10% YoY, with aggregate earnings coming in 6% higher than consensus estimates.” It highlighted that there were more beats than misses in the universe of stocks under their coverage but aggregate earnings continue to be revised lower.
Earnings performance across sectors
1) Banks: The banking sector had a mixed quarter. Business activity picked up slightly in Q4, but margins showed different trends. Most large private banks saw a slight improvement in their NIMs due to fewer interest-earning days in the quarter, while public banks continued to see a modest decline in margins.
2) Autos: Motilal Oswal said that stocks under its coverage recorded a revenue growth of about 6%YoY in line with its expectations. Auto manufacturers (OEMs) grew 5 per cent, while auto parts suppliers (ancillaries) grew faster at 8 per cent.
3) Consumer: The consumer sector, as per Motilal Oswal, saw a “6.2% year-on-year revenue growth, close to the expected 6.3%. Excluding ITC, “the consumer sector grew 6.6%. Overall demand stayed weak, with most companies reporting only low to mid-single-digit volume growth,” it added.
4) Oil & Gas: Revenue growth came in at 7% overall. Motilal Oswal analysis highlighted, “EBITDA was 16 per cent above estimates but flat YoY, mainly driven by strong results from OMCs, GAIL, and IGL. Without OMCs, EBITDA stayed flat YoY. Adjusted PAT beat estimates by 27 per cent.”
5) Technology: IT services companies in the Motilal Oswal Universe recorded a 0.7 per cent revenue decline in Q4FY25, after modest growth in the previous three quarters. The sector “continued to face pressure from macroeconomic uncertainty, leading to a weak end to FY25,” added Motilal Oswal. For FY26, TCS and Wipro are expected to see a slow start, Infosys is cautiously optimistic with up to 3% growth, and HCL Tech’s prospects emerge as most promising.
6) Metals: Ferrous companies saw strong growth as imports eased. Sales volumes increased by 9 per cent year-on-year and 12 per cent sequentially, driven by a pickup in construction activity, lower imports, and a low base from last year.
FY26 outlook for India Inc
Looking ahead and assessing the prospects for FY26, brokerages maintain a cautiously optimistic outlook, with expectations of double-digit profit growth led by financials, metals, and energy, though risks to earnings forecasts remain.
