MUMBAI: It’s been a good earnings season for India Inc with operating profits rising nearly 11% year-on-year, backed by robust revenue growth — the best performance in almost 12 quarters. Controlled expenses helped cushion the bottom line at a time of elevated commodity prices, while a weaker rupee came as a windfall for exporters.
The cuts in GST rates boosted demand for consumer goods, cars and two-wheelers, driving up volumes. While the sharp increase in the cost of packaging materials and other inputs hurt, many businesses were able to pass on the cost to consumers through higher selling prices.
For a sample of 2,278 companies (excluding banks, financials and oil marketing companies), net sales were up a good 14.4% year-on-year in the March quarter, leaving operating profit margins steady at a strong 17%. While the reported net profit for the universe jumped 34% year-on-year, the rise was more moderate at 24% once other income was excluded. In fact, accounting for exceptional items, the increase was even more modest at 17-18%.
Among the stand-out performances were those from Nestle, FSN E-Commerce Ventures (Nykaa), Mahindra & Mahindra, UltraTech Cement and Asian Paints.
Revenue growth during the quarter was strong, with companies able to sell bigger volumes and also, in many instances, earn better realisations. At Ultratech, for instance, revenues increased by 19%, led by higher realisations and bigger, above-industry volumes, up 9%.
At food major Nestle, domestic revenues grew 23%, the best performance since the Maggi crisis, driven by high-teen volume growth. At Ashok Leyland, revenues were up 19%, aided by both volume increases and good realisations. After three quarters of decline, Colgate’s volumes went up in Q4FY26 by 4%, helping the company post a revenue increase of 9%.
Consolidated net sales at Asian Paints increased 10.8% on the back of double-digit volume growth. Two-wheeler player TVS Motors reported a revenue growth of 34%, helped by better volumes and realisations, as did Bajaj Auto, whose revenues were up 32%. Avenue Supermarts turned in a good set of numbers as like-for-like revenues went up by nearly 11%, pushing up total revenues by 19%.
However, inflation in commodities crimped margins at many firms. Ashok Leyland, for example, saw its gross margins contract 80 bps while Ebitda (earnings before interest, taxes, depreciation and amortisation) margins were down 40 bps. At Colgate, operating profit margins contracted 210 bps. Maruti Suzuki’s Ebitda margins were flat despite the carmaker reporting strong revenue growth of 28%, on the back of better volumes and average selling prices.
Operating profits at Jubilant Foodworks inched up by a slow 5%, and the packaging-cost inflation is expected to persist in the near term.
The IT pack reported disappointing results for the March quarter as companies missed estimates, albeit not by too wide a margin, owing to weak discretionary demand. Operating margins expanded for most players, helped by cost-efficiency initiatives and rupee depreciation. Deal wins were unexciting — partly due to an unfavourable base for some companies — and the commentary on GenAI-led revenues was unconvincing.
Revenue growth guidance from most companies for the coming quarters was subdued, and analysts attribute this to revenue deflation from AI. They believe offsetting growth challenges in a competitive space will be difficult.
Most new-age technology companies fared well during the quarter. Nykaa, for instance, reported a rise in net revenues of 28%, beating estimates, and driving up net profits by a splendid 315%. Lenskart, too, delivered stellar numbers as consolidated revenues rose 41%, driven by a 25% jump in volumes and a 12% rise in average selling prices, albeit helped by a favourable base.
Source: The Financial Express
