India Inc will likely report subdued results for the December 2024 quarter, going by the numbers put out by the early birds. The first set of results indicates businesses are struggling to grow their top lines and that they are reining in expenses to be able to shore up their bottom lines.
For a universe of 142 companies, banks and financials, the top line in the quarter ending December 2024 is flat, growing at less than 1% year-on-year. However, the total expenditure contracted by 1.7% y-o-y, resulting in an expansion in the operating profit margin of 209 basis points (bps). That has pushed up net profits by 7.8% y-o-y. In the banking space, Axis disappointed with 4% earnings growth due to bigger provisions. The slower loan growth of 9% y-o-y has been disappointing and suggests the operating environment for lenders is not an easy one.
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The numbers from the IT pack were somewhat mixed with Infosys and Wipro exceeding market expectations but TCS and HCL Tech failing to do so. TCS attributed the misses on both the revenue and profit fronts to a seasonally weak quarter. However, all four firms reported strong deal wins indicating that discretionary spends are looking up. Management commentary confirmed this. Infosys CEO Salil Parekh said that discretionary spending in the US was recovering in the BFSI space and similar trends were visible now in Europe. According to Wipro CEO Srini Pallia clients are cautiously optimistic and discretionary spending is gradually recovering.
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Reliance Industries Limited (RIL) posted better-than-expected consolidated operating profits, up 7.7% y-o-y, on the back of a reasonably good show from the retail segment. While the O2C (oil to chemicals) business reported an improvement, the performance of the telecom segment was weak owing to the slow flow-through of the July 2024 tariff hikes.
As expected, Indian Hotels posted strong numbers in a seasonally favourable quarter with gross revenues going up by 29% y-o-y.
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