More Stories

Informist, Wednesday, Mar. 19, 2025

 

By Anjana Therese Antony

 

MUMBAI – Marking another quarter of a slowdown, the December quarter revenue growth of 499 of the Nifty 500 companies was the third-slowest in 16 quarters. Though the revenue growth crawled, the net profit of these companies rose at a slightly faster pace – the profit growth was the highest in three quarters. Both the top line and adjusted bottom line growth of the companies in this broad index largely reflected the growth reported by the Nifty 200 index companies. 

 

While Rajesh Exports Ltd. is part of the Nifty 500, it has been excluded from this analysis, as the company is yet to declare its December quarter earnings. 

 

The revenue of the 499 companies rose 6% on year to INR 32.12 trillion in the December quarter. Sequentially, the revenue rose nearly 4%, better than the fall posted in the previous two quarters. The adjusted net profit of these companies grew nearly 8% on year as well as on quarter to INR 3.64 trillion. The sequential growth in net profit of these companies was similar to their revenue growth, which rose for the first time after a decline of two straight quarters. 

 

A fall in expenses helped these companies post better profit growth than justified by their revenue growth. The total expenses of the 499 companies rose only 3% on year to INR 29.19 trillion, the slowest rise in the past five quarters. This was due to a fall of 2.5% in raw material prices, a sharp slowdown from the almost 9% on-year rise in each of the last two quarters. 

 

Excluding the top 200 companies, the earnings growth of the remaining 299 companies painted a markedly different picture. The revenue of these 299 companies rose nearly 9% on year to INR 4.83 trillion, faster than the 6% growth of the 499 companies. But the total expenditure of the 299 companies also rose nearly 9% to INR 4.46 trillion, putting pressure on the adjusted bottom line, which fell 0.6% to INR 400.07 billion, against the near 8% rise reported by the top 499 players. 

 

"With regard to sectors, margins of most are close to decadal highs...Corporates are already performing at high operating efficiency, leaving little room for further improvement," Nuvama Institutional Equities said in its earnings review report in February. The demand slowdown was broadening from exports to domestic, and within domestic from low-end to high-end product companies, which was a sign of worry, the broking firm said. 

 

THE STARS

Sectors that saw sharp growth in adjusted net profit for the December quarter were information technology, media, telecommunications, pharmaceuticals, and chemicals. Companies in these sectors also saw their revenue rise in high single digits.  

 

The 49 IT, media, and telecom companies in the Nifty 500 together saw the highest net profit growth of about 39% on year, almost five times the aggregate growth of the Nifty 500 group's 8%. The massive rise in the bottom line of telecom companies exaggerated the aggregate growth picture for the three sectors. This was due to Indus Towers' INR 30-billion write-back of provisions for bad debt as well as the tariff hikes telecom players had effected in July. The net profit of the three sectors together grew 39% on year to nearly INR 397 billion. Their revenue growth was 9.3% from the year-ago period, the third-highest among sectors and higher than the 6% reported by the Nifty 500 group.

 

IT companies saw healthy earnings growth in a seasonally weak quarter amid signs of improvement in discretionary spending and a positive trend in hiring. Most IT players, which usually give revenue growth guidance for the financial year, raised their growth estimates, except Cyient Ltd. which  cut its guidance. 

For pharmaceutical and chemical players, the adjusted net profit of 85 listed firms in the Nifty 500 grew nearly 22% on year to INR 231 billion, much higher than the 8% rise of the top 499 companies. New product launches and robust domestic demand helped pharma players post healthy growth in both net profit and revenue. Drug maker Sun Pharmaceutical Industries Ltd. and fertiliser company UPL Ltd. were the only two companies among the whole group to post revenue of more than INR 100 billion each, together accounting for over 12% of the sector's total top line. 

 

On revenues, the IT-media-telecom pack as well as the pharma-chemical group posted around 10% on-year growth each. These posted the second-biggest growth in top line after consumer-heavy companies. However, the net profit growth of consumer players was low.

 

LAGGARDS

While most sectors managed to post on-year growth in their bottom line for the December quarter, energy and transport companies reported contraction. The quarter also saw continued downgrades by broking firms, particularly for commodity-oriented sectors such as energy. This was because of sustained weakness in earnings, higher uncertainty about global trade, and emerging signs of a domestic slowdown, the National Stock Exchange said in its corporate performance review for the December quarter. 

 

For energy companies, which include oil and utility players, the adjusted net profit of 35 companies fell 8% on year to nearly INR 680 billion, while revenue rose just 0.1% to INR 9.63 trillion. There are four oil heavyweights in the list of energy players--Reliance Industries Ltd. and the three state-owned oil marketing companies Bharat Petroleum Corp. Ltd., Hindustan Petroleum Corp. Ltd., and Indian Oil Corp. Ltd.--which account for more than half the total sectoral revenue. Excluding these four, the net profit of energy companies fell 11% on year in the December quarter and revenue declined 2%. 

 

Another laggard was the transport sector, which saw dull demand during the festival-heavy December quarter. The revenue of 48 firms in this sector grew 8% on year to INR 3.65 trillion, but their expenses also increased at an equal pace to INR 3.34 trillion. This weighed on the sector's bottom line, which fell 2% on year to nearly INR 296 billion. THis sector includes auto, auto ancillaries, ship builders, airline, and rail companies. 

 

While the festival season provided top line growth for 54 consumer-related companies, a surge in raw material costs hurt their bottom lines. The revenue of these companies increased over 16% from the year-ago period to INR 1.82 trillion, most of which was swept away on account of higher expenses, hitting the aggregate net profit, which rose only 3% to INR 174 billion. These 54 companies include fast-moving consumer durables companies and consumer durables. 

 

IN LINE VS NIFTY 500

The sectors that posted growth largely in line with the overall Nifty 500 universe were basic industries, financial services, and electronics. The net profit of metal, construction, cement, real estate, electronics companies and financial services players rose 10% on year; around the 8% growth posted by the top 499 companies. On the sales front, financial services companies' top line rose nearly 6% and that of basic industries companies increased 8%, largely around the 6% growth reported by the Nifty 500. The 8% top line growth of 109 companies in the basic industries sector was the fastest in nine quarters, but expenses also mirrored a similar rise. 

 

While the non-banking financial segment was among the very few that saw earnings upgrades on strong earnings growth, earnings estimates for banks were largely stable. Analysts said the operating expenses of most players were lower than expected and the fall in margin was limited. The total expenditure of 94 banks and NBFCs fell 8% to INR 5.32 trillion, a first on-year decline in this metric in at least 17 quarters. The net profit of these companies grew 10% on year to INR 1.40 trillion and the top line rose 6% to INR 5.73 trillion. 

 

The following table is the snapshot of sector-wise performance of companies during Oct-Dec in the descending order by on-year growth of net profit excluding exceptional items:

 

Sector	Number of companies	Oct-Dec PAT excluding exceptional items (% change)		Oct-Dec net sales (% change)		Total expense growth in %
		YoY	QoQ	YoY	QoQ	YoY	QoQ
Nifty 200	200	8.79	8.49	5.49	3.89	6.28	3.30
Nifty 500	499	7.69	7.84	6.01	3.69	3.11	-0.09
IT, media, telecom	49	38.71	18.75	9.31	2.82	6.03	1.09
Pharma & chemicals	85	21.89	-1.36	10.47	-0.76	8.32	-0.38
Financial services	94	10.01	2.61	5.55	-1.39	-7.64	-14.59
Basic industries	109	9.95	14.6	8.24	5.13	8.35	4.12
Services	25	5.85	58.97	20.1	12.49	20.78	10.12
Consumer	54	2.56	1.61	16.44	3.52	18	3.91
Transport	48	-2.11	20.73	8.28	6.87	8.69	5.97
Energy	35	-7.9	7.56	0.07	5.78	0.45	4.33

 

(Note: Basic industries includes mining, metals, cement, construction, and real estate companies. Services include hotels, retail, tourism, and travel.)

 

End

 

Data compiled by Vinod Bhovad

Edited by Avishek Dutta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2025. All rights reserved.