Early-bird results in Q3 show worst earnings growth in 17 quarters

IT firms, RIL slow profit growth; banks biggest laggards in revenue

The results of early-bird companies in October-December 2025 (Q3FY26) have shown just single-digit growth in revenue despite gains from cuts in goods and services tax (GST) rates. 

They also clocked a sharp deceleration in earnings growth. Reliance Industries and information-technology (IT) firms led the deceleration in earnings growth, while banks were the biggest laggards when it came to revenue increase. 

The combined net profits of 143 early-bird companies whose results are available were up just 3.5 per cent year-on-year (Y-o-Y) in Q3FY26, decelerating sharply from 11.2 per cent growth in Q3FY25 and 10.1 per cent in Q2FY26. 

Combined net profits were ₹98,621 crore in Q3FY26, up from ₹95,328 crore in Q3FY25 but a decline from around ₹1 trillion in Q2FY26. 

This is the worst performance on earnings by these early-bird companies in at least 17 quarters. These companies’ adjusted net profits (excluding the impact of the four labour Codes introduced in the last quarter and other exceptional gains and losses) were up 8.1 per cent Y-o-Y, decelerating from 10.3 per cent in Q3FY25 and 11.7 per cent in Q2FY26. 

Adjusted net profits grew to ₹1.03 trillion in Q3FY26, up from ₹95,406 crore in Q3FY25 and ₹1.02 trillion in Q2FY26. 

Excluding banks, financial services & insurance (BFSI), and oil & gas, those had their first contraction in earnings in over two years. BFSI and oil & gas, however, reported better earnings growth than the entire early-bird sample (see the adjoining charts).

The companies’ combined net sales (gross interest income in the case of banks and other lenders) were up 7.4 per cent Y-o-Y in Q3FY26, a slight deceleration from 7.8 per cent growth in Q3FY25 but an improvement from 6.3 per cent growth in Q2FY26. Their combined net sales grew to ₹7.93 trillion in Q3FY26 from ₹7.38 trillion in Q3FY25 and ₹7.69 trillion in Q2FY26. 

IT firms such as Tata Consultancy Services, Infosys, and Wipro, which are the biggest employers in corporate India, made additional provisions for costs related to the labour Codes, leading to a Y-o-Y decline in their earnings in Q3FY26. The combined reported net profits of the IT companies declined 9.1 per cent Y-o-Y in Q3FY26, compared to 13.4 per cent Y-o-Y growth in Q3FY25 and 3.3 per cent growth in Q2FY26. 

In comparison, their adjusted net profits (excluding the provisions for the labour Codes and other exceptional gains and losses) were up 6.3 per cent Y-o-Y against 10.2 per cent Y-o-Y growth in Q3FY25 and 6.4 per cent Y-o-Y in Q2FY26. 

IT companies’ combined reported net profits declined to ₹26,047 crore, the lowest in the last eight quarters and down from ₹28,655 crore a year earlier. In comparison, their adjusted net profits grew to a record high of ₹30,473 crore in Q3FY26.

The IT firms, however, reported an uptick in top line growth and their combined net sales were up 7.7 per cent Y-o-Y in Q3FY26, growing at the fastest pace in the last 10 quarters and accelerating from 5 per cent Y-o-Y growth in Q3FY25. 

Banks were the biggest laggards and the combined gross interest income of 13 listed banks in the sample grew by just 1.9 per cent Y-o-Y in Q3FY26, their worst revenue growth in at least the last 17 quarters. 

In comparison, their gross interest income was up 10.2 per cent Y-o-Y growth in Q3FY25 and 3.1 per cent in Q2FY26.

Banks’ net interest income was, however, up 5.2 per cent Y-o-Y in Q3FY26, improving from 4.1 per cent growth in Q2FY26 but slowing from 9.3 per cent in Q3FY25. 

Listed banks’ combined reported net profits were up 9.3 per cent Y-o-Y in Q3FY26, slowing from a 12.5 per cent increase in Q3FY25 and 11.8 per cent expansion in Q2FY26. 

Banks reported combined net profits of ₹44,988 crore in Q3FY26, up from ₹41,142 crore in Q3FY25 and ₹46,003 crore in Q2FY26. 

 

The sample is dominated by banks, IT companies, and Reliance Industries. They together accounted for 83.3 per cent of the companies’ combined net sales (or gross interest income) in Q3FY26, 90.9 per cent of reported net profits, and 91.2 of adjusted net profits.   

HDFC Bank, Reliance Industries, ICICI Bank, TCS and Infosys came on top, together accounting for nearly two-thirds of the combined net profits of all early bird companies in Q3FY26.