More Stories

Informist, Monday, Jul. 14, 2025

 

By Rajesh Gajra

 

NEW DELHI – The June quarter financial performance of companies in the basic industries sector is likely to have been mixed. Performance on some key parameters such as demand, pricing power, revenue, operating expenses, and net profit is seen to have improved while that on others likely weakened year on year.

 

On the whole, the sector is expected to have experienced stable demand conditions in the reporting quarter, albeit with single-digit volume growth on year. Steady pricing power would likely enable the sector to report single-digit aggregate revenue growth on year, similar to that recorded in the March quarter.

 

The basic industries sector covers subsectors such as capital goods, metals, cement, and real estate. These mostly have large exposure to the domestic market, but exports and international operations also account for a notable share in the revenues of select companies. The domestic macroeconomic conditions in the June quarter were mixed and would have had a bearing on the sector's overall performance.

 

On the one hand, infrastructure-led demand, a pick-up in the government's capital expenditure, sustained real estate activity, the government's imposition of safeguard duty on steel imports, and steady order inflow led to overall improvement in macroeconomic conditions. On the other, tardy private-sector capital expenditure, rising commodity prices, sluggish urban consumption, mixed input costs trend, and the early onset of the southwest monsoon in May followed by a lull in June weighed negatively on the sector.

 

As per an average of estimates by 20 brokerages,  the aggregate revenue of 39 companies from the basic industries sector for the June quarter is likely to have increased 6.3% on year, while their aggregate net profit may have risen 21%. This year-on-year performance of the sector would not be fundamentally different from that seen in the previous quarter for a similar set of companies from the sector, except for a notable increase in net profit growth. In the March quarter, 34 companies from the basic industries sector had recorded aggregate revenue growth of 6.8% on year and net profit growth of 15%.

 

On a quarter-on-quarter basis, the aggregate revenue of the 39 companies for the June quarter is estimated to decline 12% and the aggregate net profit is seen falling 21%. This indicates that analysts expect a sequential weakness in the earnings performance of these companies.

 

METALS, MINING DRAG

The estimated single-digit growth in the basic industries sector's overall revenue for the June quarter is largely on account of metal and mining companies, which contribute the most to the sector's revenue. The estimates by brokerages indicate these companies are likely to have recorded weak on-year revenue growth in the June quarter. Low volume growth is seen dragging down the revenue performance of metal companies.

 

On the other hand, their pricing power was steady, particularly in the case of steel companies, with the 12% safeguard duty on imports applying the brakes on cheap imports of steel, mainly from China. Brokerage Prabhudas Lilladher said in a preview note on metal companies in its coverage universe that the June quarter volume is likely to "disappoint amid best pricing conditions".

 

Not all metal and mining companies are seen weak on top-line growth for the quarter. Hindustan Zinc Ltd. with an estimated 46% increase on year, National Aluminium Co. Ltd.'s 34% growth, and NMDC Ltd.'s expected 20% rise in revenue are the outliers among metal and mining companies, according to the brokerages' estimates.

 

Capital goods companies, the second-largest revenue contributor in the basic industries sector, are seen to have performed better than the metal and mining companies. Brokerage Kotak Securities' institutional equities division expects these companies' order books "to swell across power T&D (transmission and distribution), defence, (and) data centres".

 

Brokerage Mirae Asset Sharekhan said it expects its capital goods coverage universe, including product-based companies, to post 18.7% revenue growth in the reporting quarter. The revenue growth of capital goods companies with large exposure to the power sector is, however, likely to have moderated as demand was soft in the June quarter amid the early onset of rains.

 

The capital goods coverage universe is expected to report 14% on-year growth in revenue, Motilal Oswal Financial Services said in its preview report. But the brokerage warned it was still waiting to see broad-based revival in domestic and private capital expenditure, along with sustained momentum in order inflow. Emergency procurement may have augured well for both private and public-sector defence companies, the brokerage added.

 

"We envisage continued focus on key infra capex areas... should reflect in this (June) quarter's order inflows," Nuvama Wealth Management said its preview note on engineering and capital goods companies. The brokerage anticipates a pickup in public capital expenditure in the first two quarters of the financial year 2025-26 (Apr-Mar), but said private-sector capital expenditure "is so far visible only in new age areas" such as data centres, electronics, battery manufacturing, solar modules, and water treatment.

 

Cement companies and real estate companies are the lowest contributors to the overall revenue of the basic industries sector. These companies are, however, expected by analysts to report strong on-year revenue growth in the June quarter on the back of higher realisations and increase in volumes.

 

The cement production volume rose around 10% year-on-year in Apr-May, according to Kotak. The brokerage expects cement volumes for companies it covers to increase 7.5% on year in the June quarter but fall sequentially. The realisation per tonne of cement is seen improving both sequentially and annually, the brokerage said in its preview report.

 

CEMENTING PROFITS

The profitability of the basic industries sector in the June quarter will be supported mainly by cement companies. Cement prices were largely stable across the country, according to brokerage Nirmal Bang Equities. "South India saw the most significant price hikes, supporting margin improvement," it said. Subdued input costs amid decline in imported petcoke and coal prices would aid margins, and the EBITDA per tonne for the coverage universe is expected to rise 29% on year, the brokerage said.

 

There will be a mixed trend in margins from metals companies, according to analysts. "Non-ferrous players are expected to witness a subdued quarter with LME (London Metal Exchange) prices witnessing a downtrend compared to 4Q (Jan-Mar) given macroeconomic uncertainty," brokerage JM Financial Institutional Securities said in its preview note on metal companies. It said a slowdown in global demand might affect aluminium behemoth Hindalco Industries Ltd.'s US-based subsidiary Novelis's margins in the near term.

 

Capital goods companies are also expected to show a divergent trend in their operating margins for the June quarter. Nuvama expects Larsen & Toubro Ltd.'s consolidated EBITDA margin to inch up to 10.3% in the reporting quarter from 10.2% a year ago. For another major capital goods player, Cummins India Ltd., the brokerage expects the EBITDA margin to contract slightly to 20% from 20.3%.

 

The growth in net profit of companies in the basic industries sector is seen to largely mirror their margin growth for the June quarter. The overall net profit is expected to be reined in by low revenue growth and other non-operating factors. Brokerage Motilal Oswal expects the capital goods companies in its coverage universe "to report a healthy earnings (net profit) growth of 12% YoY (year on year)... marking the second consecutive quarter of posting less than 15%+ earnings growth."

 

The following table shows the June quarter earnings estimates by 20 brokerage firms for companies in the basic industries sector that are a part of Nifty 200 index.

 

Company	Sales, INR million	PAT, INR million	Sales YoY Change %	Net Profit YoY Change %	Sales QoQ Change %	PAT QoQ Change %	EBITDA, INR million
ABB India	31,766	4,771	12.2	7.6	0.5	0.5	5,848
ACC +	57,560	5,593	12.3	55.8	-4.6	-25.4	9,041
Ambuja Cements +	97,181	8,954	18.1	30.7	-0.8	-12.6	19,256
APL Apollo Tubes +	52,989	2,483	5.6	28.3	-4.6	-15.5	3,905
Astral +	14,812	1,268	6.5	5.5	-12.4	-29.2	2,343
Bharat Dynamics	2,685	496	40.5	587.4	-84.9	-81.8	-29
Bharat Electronics	48,288	9,060	13.9	16.9	-47.6	-56.9	11,119
BHEL	66,872	511	20.6	N.A.	-26.4	-89.9	1,917
CG Power and Industrial Solutions +	27,647	2,846	24.1	18	0.4	4.6	3,682
Cochin Shipyard	7,786	1,531	9.7	-15.3	-52.8	-46.2	1,581
Container Corp	22,886	3,115	9.1	22	0.3	3.1	4,712
Cummins India	25,765	4,689	11.9	10	4.9	-11.4	5,074
DLF +	19,927	8,836	35.9	32	-40.8	-33.6	5,704
Godrej Properties +	12,060	3,943	59.6	-18.9	-44.4	10.4	808
Hindalco Industries +	6,04,150	35,716	5	16.9	-7.7	-32	73,908
Hindustan Aeronautics	48,894	13,331	12.8	-4.9	-64.2	-65.5	11,353
Hindustan Zinc	77,126	20,962	45.8	-10.7	27.3	-29.2	37,654
IRB Infrastructure Developers +	20,488	2,007	13.2	35.5	-2.4	-11.6	9,545
Jindal Steel & Power +	1,22,430	11,021	-9.2	-13.8	-6.2	N.A.	25,655
JSW Steel +	4,30,251	20,078	0.2	128.3	-4	28.3	72,911
L&T +	6,28,920	38,803	14	21.6	-15.5	-38.4	68,751
Lodha Developers +	34,986	6,610	32.3	54.4	-10.9	-20.4	9,854
Mazagon Dock Shipbuilders +	27,112	5,668	15	-18.6	-14.6	74.2	4,868
National Aluminium Co	38,115	11,087	33.8	79.4	-27.4	-48.1	15,667
NMDC	65,850	18,481	20.2	-7.4	-7.1	22.9	23,166
Oberoi Realty +	13,449	5,665	0.5	3.3	22.8	39.4	7,941
Phoenix Mills +	10,291	2,864	13.8	23.2	1.3	6.5	5,984
Polycab India +	56,702	5,111	20.3	29.1	-19.1	-29.6	7,490
Premier Energies +	18,475	2,877	11.5	45.2	14	3.6	5,425
Prestige Estates +	17,653	2,122	-5.2	-8.8	15.5	748.8	5,908
Shree Cement	51,874	5,457	6.1	69.5	-2.1	-3.2	12,703
Siemens	42,290	4,426	-11.3	-16.2	11.1	-34.1	5,125
Steel Authority of India	2,58,934	11,353	7.2	10080.1	-12.2	-7.7	34,864
Supreme Industries +	28,027	2,446	5.5	-11.9	-8.1	-18	3,846
Tata Steel +	5,14,826	16,892	-5.6	71.6	-8	26.6	70,012
Tube Investments of India	20,604	1,606	5.1	4	5.3	-80.3	2,466
UltraTech Cement +	2,13,372	21,760	18.9	27.4	-6.8	-12.9	44,038
Vedanta +	3,63,592	29,721	1.7	-22.8	-10.1	-20	1,01,762
Waaree Energies +	44,830	6,510	31.5	65.2	12	5.2	9,898
Total	42,41,459	3,60,669	6.3	20.6	-12	-21	7,45,757

 

Notes:
+ Consolidated Figure
* Net interest Income
Y-o-Y: Year-on-Year
# Net premium income
Q-o-Q: Quarter-on-Quarter
N.A.: Not Available
Estimates from:
Anand Rathi Share and Stock Brokers Ltd., Antique Stock Broking Ltd., Centrum Broking Ltd., Dolat Capital Market Pvt. Ltd., Elara Securities (India) Pvt. Ltd., Emkay Global Financial Services Ltd., HDFC Securities Ltd., HSBC Global Research, ICICI Securities Ltd., IIFL Capital Services Ltd., JM Financial Institutional Securities Pvt. Ltd., Kotak Institutional Equities, Motilal Oswal Financial Services Ltd., Nirmal Bang Equities Pvt. Ltd., Nomura Equity Research, Nuvama Wealth Management Ltd., Prabhudas Lilladher Pvt. Ltd., Sharekhan Ltd., Systematix Shares and Stocks (India) Ltd., and YES Securities (India) Ltd.

 

End

 

Data compiled by Shivaji Jagatap

Edited by Rajeev Pai

 

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 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

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