Earnings Outlook: Demand Pickup or Cost Manipulation? Look Who’s Talking

The April-June quarter earnings from India companies fell short of expectations, with BSE 500 companies posting an 8% year-on-year rise in revenue growth and a 3% increase in profit. Analysts say investors will be watching the results closely. perspective closer than ever, as stock valuations depend on continued growth in profitability. Motilal Oswal Finance It has compiled what company management had to say about the outlook for the respective sectors in the quarter after June.

Cars

Industry managements expect auto sales volume growth to pick up in the second half, driven by a normal monsoon and the upcoming festival season. The two-wheeler segment is likely to outperform other segments.

Capital goods

Company executives are seeing strong demand in segments such as power transmission and distribution, renewable energy, data centers, real estate and defense. performance EPC (Engineering, Procurement and Construction) sector players are expected to improve in the second half of FY25.

Specialty chemicals

Despite the end of destocking, price pressure remains and rising raw material costs and freight rates are expected to weigh on margins.

Consumer

Companies plan to implement price hikes in the second half of fiscal 2025 to offset rising raw material costs. The outlook for rural markets is positive and operating profit margins are expected to gradually improve.

Banks and NBFCs

Higher funding costs are likely to lead to a mild moderation in net interest margins (NIMs). Public sector banks may continue to post sustained earnings growth with improving asset quality, while NBFCs and HFCs face challenges in the mortgage segment due to tighter regulations and seasonal weaknesses.

Health care

Chronic therapies in the domestic formulation (DF) segment continue to show growth, while acute therapies face seasonal challenges. The pharmaceutical sector benefits from niche markets in the US and EU, and hospitals are expanding to meet demand.

Logistics

Company managements expect operational performance to improve with the festive season, supported by reduced fuel costs and stable operating expenses. Long-term optimism in this sector is driven by sector growth drivers such as e-invoicing, GST implementation, expansion of dedicated freight corridor routes and better port connectivity, encouraging a shift towards the organised sector.

Rails

Stable or declining coking coal costs and domestic demand are likely to support ferrous metals volumes and margins. However, global uncertainties could limit international prices.

Oil and gas

Major oil companies marketing Companies are on track to complete their expansion projects over the next two years, positioning them for substantial growth. City gas distributors are optimistic about strong volume growth and stable margins, and spot LNG prices are expected to remain stable. Gas service companies are also forecasting robust transmission volumes.

Demand rebound?

REAL ESTATE

Companies are confident of sustaining demand and are targeting 20-30% growth in FY25, focusing on timely launches due to low inventory levels.

TECHNOLOGY

IT companies remain cautious about near-term demand, with a modest recovery in discretionary spending expected in the US banking and financial services sector.

Strong deal gains and signs of early recovery in BFSI suggest that FY25 could outperform FY24.

TELECOMMUNICATIONS:

Tariff increases are expected to drive revenue growth from October onwards, with companies focusing on deleveraging. Capital expenditure is likely to moderate at Bharti and Jio, while Vodafone Maintains its investment in network improvements.