India Inc: Key takeaways from Q1 earnings season

At the end of the Fiscal Year 25 Q1 Earnings SeasonA detailed analysis indicates a stable outlook with moderate revenue growth. Banking and auto stocks inside the 50 elegant It demonstrated a remarkable performance by outperforming the overall sales growth of the Nifty 50. However, the underperformance of infrastructure, pharma and metals stocks within the Nifty 50 moderated the earnings growth to a modest 3%. This article will explore these results in detail, highlighting the key takeaways from the earnings season.

Over the past five quarters, the average revenue and net profit growth was 9% and 20%, respectively. In the first quarter of fiscal year 25, revenue growth remained stable at 9%, but net profit growth was lower at 3%. This reflects steady revenue growth, although there are signs of a slowdown in profitability.

In the first quarter of fiscal year 25, real estate companies showed significant year-on-year growth in both revenue and profitability, outperforming other sectors. Banks and automotive companies also showed consistent performance in sales and profitability, while pharmaceutical sector showed a substantial increase in profitability.

Public and private banks in India Private banks reported year-on-year increases in total income and PAT during the first quarter of FY25. Business momentum remained strong during the quarter, with moderate growth in loans. Leading banks witnessed sequential growth. While banks showed growth in their advances, deposit growth remained sluggish, which is a key concern for them. Net interest margins (NIM) remained stable, with private banks continuing to report higher NIMs compared to PSU banks. Non-performing assets (NPAs) declined in both segments, reflecting improved asset quality. However, banks faced pressure due to sluggish performance of their current account and savings account (CASA) deposits.

The auto sector had a solid quarter, with all companies reporting annual sales growth and most posting higher profits after tax. This growth was driven primarily by sales of two-wheelers, three-wheelers and commercial vehicles, though passenger vehicles and tractors missed expectations. The sector expects moderate growth, supported by government efforts to boost rural consumption and disposable income.

Indian IT giants have shown resilience amid macroeconomic uncertainties. IT companies Results have exceeded market expectations, indicating a solid performance and sequential growth in key markets. Despite pressures on profits and margins, revenue growth remains robust, demonstrating the potential of the sector.

The pharmaceutical sector continued its strong performance, with after-tax profits marking an impressive 89% increase and total revenues up 13% year-on-year. Most companies have reported their best-ever quarterly results. The notable increase in profitability was driven by higher profit margins, controlled costs, increased export opportunities in the US and a shift in product mix.

In the real estate sector, mid-caps achieved significant sales growth, while large-caps faced a decline in annual sales. Despite this, most real estate companies reported improved profitability, driven by increased leasing activity and expansion into new areas.

The FMCG sector recorded moderate revenue and marginal profit growth. Government initiatives to boost rural employment and consumption suggest potential for further improvement in this sector.

On the other hand, the Nifty Energy and Nifty PSE Sectors underperformed, with stagnant revenues and declining profitability.

Technical perspective:

The Nifty index had a volatile week and closed at 24,541, up 0.71%. The index regained its position above the 20-day moving average after a period of consolidation. The index remains above the 50% retracement level, indicating that the oversold territory has now been breached.

The daily RSI has rebounded from lower levels and settled at 55. The main trend of Nifty remains positive on the weekly time frame. Strong support is seen at 24,100, while 24,950 serves as a hurdle; a break above this level could extend the rally towards 25,150-25,220 zone.

The global market remains neutral to positive, while the domestic market has followed the trend. India’s VIX is currently at 14.40, holding below the 15-mark. Overall, the Nifty is expected to trade sideways with a positive bias.