The June 2025 quarter earnings season for India Inc has presented a mixed bag, with some sectors outperforming expectations while others struggled against headwinds. As of now, 36 of the Nifty 50 companies have declared their results, providing insights into the broader economic and sectoral trends.
Overall Performance: The earnings season has been largely in line with expectations, reflecting the anticipated economic environment. Brokerages suggest a stabilization in the current earnings cycle after a period marked by downgrades and volatility. Motilal Oswal Financial Services (MOFS) reported that earnings for 38 Nifty firms grew 7.5% year-on-year, surpassing their estimate of 5.7%. However, Nifty EPS for FY26 has been cut by 1.1% to Rs 1,110.
Sectoral Highlights: The BFSI, technology, oil & gas, cement, and utilities sectors primarily drove earnings growth in the first quarter of FY26. These sectors accounted for approximately 71% of the total incremental year-on-year growth in Nifty earnings. The cement sector experienced the most significant profit surge, driven by price increases and operating leverage. The oil & gas sector benefited from stable crude prices during the quarter. Other sectors that performed well include pharmaceuticals, telecom services, organized retail, aluminum, and airlines. Pharmaceuticals saw a revenue increase of 9-11% year-on-year, exceeding corporate India's revenue growth for the past 10 quarters, driven by strong export demand and a stable domestic market. Telecom services are estimated to have revenue growth of 12% year-on-year, while the aluminum sector's revenue likely jumped by 23% during the quarter.
Areas of Concern: Crisil Ratings data indicates that India Inc's revenue growth likely slowed to 4-6% in the April-June quarter, compared to approximately 7% growth in the previous two quarters. This slowdown is attributed to the sluggish performance of the power, coal, information technology services, and steel sectors. Earnings before interest, tax, depreciation, and amortization (EBITDA) are estimated to decline by 10-30 basis points to 4% year-on-year. Several factors have impacted specific sectors. The early onset of the monsoon and lingering geopolitical uncertainties are expected to have materially affected some sectors in April-June. The IT services sector has been impacted by geopolitical uncertainties, leading to project delays and a slowdown in activity.
Brokerage Insights: Jefferies noted that the June-quarter earnings season has been better than expected, with an improving downgrade ratio. However, nearly 50% of the companies they tracked still experienced earnings downgrades, although this is an improvement from the average of 57% over the last three quarters. The bulk of earnings cuts were concentrated in the banking sector, particularly among larger private lenders, due to concerns over asset quality and net interest margin (NIM) compression. In contrast, NBFCs reported stronger asset growth and profitability, although management commentary remained cautious on consumption demand. Kotak Securities remains bearish on the IT sector, citing continued challenges around growth and margins due to persistent weakness in discretionary spending. IT companies have also cited uncertainties from macroeconomic headwinds, delayed client decision-making, and soft discretionary spending.
Key Earnings to Watch: The Q1 FY26 earnings season is ongoing, with 128 companies scheduled to announce their financial results this week. Key companies to watch include DLF, Adani Ports, Bharti Airtel, Lupin, Bajaj Auto, BHEL, Trent, BSE, Life Insurance Corporation (LIC), Sun TV Network, Titan, and Tata Motors.
