 "q1 results, company quarter 1")
Corporate profits remained weak in Q1FY26, amid single-digit growth in revenues for the ninth consecutive quarter. While combined net profit rose 9.4% year-on-year, the growth was mostly driven by one-off gains. PBT, excluding other income, fell 0.2% compared to 13.3% growth in Q4FY25. Krishna Kant and Ram Prasad Sahu analyse the performance of companies across key sectors
Automobiles
* Barring exceptions such as Mahindra & Mahindra (M&M), Eicher Motors and TVS Motor, most automakers posted a year-on-year (Y-o-Y) decline in volumes for the first quarter of 2025-26 (Q1FY26). Hero MotoCorp and Hyundai Motors posted the sharpest volume fall of 12 per cent each
* While revenues and operating profit were broadly in line with expectations, net profit for many companies was boosted by higher other income
* Barring tractors, demand has remained sluggish for most segments of the auto sector
* However, auto majors are optimistic about a demand revival on the back of festival season, traction in rural markets, lower interest rates and higher disposable income due to tax cuts
IT-Software
- The average constant currency revenue growth of large-caps moderated to just under 1 per cent from 2.6 per cent in Q4FY25
The sequential fall in growth rate was on account of weak demand, focus on cost efficiency programmes (GenAI-led productivity gains) and cautious sentiment of clients
- Even as verticals such as banking, financial services and insurance (BFSI) were steady, there were macro headwinds and policy uncertainty for manufacturing, healthcare and retail sectors
- Cost takeout and vendor consolidation helped boost deal flows and total contract value in the quarter
- Margin pressure in the June quarter was attributed to increased employee expenses, a weakened pyramid structure, investments in sales, and pricing pressure. This is likely to continue due to higher cost-takeout deals and intense competition, according to Mirae Asset Capital Market
FMCG
* Volumes for the staples segment were higher sequentially and price gains were modest, except for Marico and Britannia where price hikes were sharper
* While the urban market is recovering and has registered its highest growth in five quarters, rural is steady and growing at twice the former
* Revenue growth for the staples at 6.4 per cent Y-o-Y was above its eight-quarter average of 4.6 per cent, points out Nomura Research
* While the top line was good, profitability was not. Gross margins contracted for most companies, given the higher cost inventory and rising raw material costs
* Companies were, however, able to limit the impact at the operating level due to cost rationalisation, resulting in operating profit staying at year-ago levels
Pharma & Healthcare
- Aggregate revenue growth for top pharma companies was about 11 per cent
- While operating profit grew in line with revenues, net profit growth was dented by higher depreciation and interest costs
- In the domestic formulation segment, growth was led by Mankind, Torrent Pharma, Sun Pharma and Ajanta Pharma on the back of new drug launches and market share gains
- For FY26, brokerages expect the sector to witness a growth of 8-9 per cent Y-o-Y
- In the US market, pricing pressures in the generic version of cancer drug Revlimid and increased competitive intensity dented the performance. While product pipeline and new launches are expected to offset sales of base portfolio, exporters face uncertainty on account of tariffs
Consumer & Retail
* Demand for apparel and grocery retailers remained muted with falling same-store-sales growth for most retailers. This was on account of advancement of Eid, early monsoon, border tensions in the North, and continued muted consumer sentiment, points out Motilal Oswal Research
* However, Avenue Supermarts saw a robust like-for-like uptick, though it came at the cost of margins, given increased proportion of lower margin food segment sales, investments in capacity and rising employee costs. Trent’s revenue growth moderated on a high base
* Jewellery makers posted strong revenue growth, though higher gold prices dented customer footfalls. Titan could face near-term growth headwinds, given increased gold prices and higher base in Q2FY25
* In the consumer durables space, wires-and-cables players outperformed while air-conditioner sales and electrical consumer durables firms lagged behind, impacted by unseasonal rains and unfavourable weather
Banking
- In Q1FY26, banks struggled with a slowdown in credit growth, margin compression from a decline in yields on loans and rise in delinquencies in retail and unsecured loans
- Some individual banks, however, outperformed with double-digit growth in interest income, gains from treasury operations and lower provisions for bad loans
- Combined gross interest income of banks was up 6.6 per cent Y-o-Y in Q1FY26, growing at the slowest pace in the last 14 quarters
Finance & Insurance
* It was a relatively good quarter for insurance companies with double-digit growth in premium income and earnings after a poor show in Q4FY25
* Insurers’ combined gross premium income was up 12.6 per cent Y-o-Y in Q1FY26, growing at the fastest pace in the last five quarters
* Their net profit was up 48.7 per cent, growing at the fastest pace in the last nine quarters
* Growth in premium income was led by life insurers such as HDFC Life and SBI Life while GIC and ICICI Lombard topped earnings growth chart in the non-life space
* Non-bank lenders reported faster revenue and earnings growth in Q1FY26 after a muted show in the second half of FY25
* Combined gross interest income of non-bank lenders was up 11.7 per cent Y-o-Y, from 7.5 per cent Y-o-Y growth in Q4FY25
* Their adjusted net profit was up 10.2 per cent Y-o-Y in Q1FY26, compared to earnings contraction in the previous two quarters
* Growth was led by retail lenders such as Bajaj Finance, Chola Financial, Shriram Finance and Muthoot Finance, among others
Metals, Mining & Cement
- The quarter under review was a muted one for mining & metal firms with low single-digit growth in net sales and net profits
- Their combined net sales was up 3.9 per cent Y-o-Y in Q1FY26, growing at the slowest pace in the last three quarters. Their net profit was up 5.7 per cent Y-o-Y, a deceleration from 14.6 per cent Y-o-Y growth in Q1FY25 and 29.1 per cent Y-o-Y growth in Q4FY25
- Revenue growth was led by non-ferrous metal producers such as Hindalco and National Aluminium while iron & steel producers like JSW Steel, Tata Steel and SAIL reported strong double-digit growth in net profit, aided by lower raw material cost and higher margins
- It was a positive quarter for cement makers as well, with a recovery in revenue and earnings growth after six quarters of low single-digit growth in revenues
Power, Infra & Capital Goods
* Power utilities such as NTPC, Tata Power and Power Grid reported muted revenue and earnings growth in Q1FY26, after double-digit growth in the second half of FY25
* Their combined net sales were up 2.3 per cent Y-o-Y in Q1FY26, growing at the slowest pace in the last nine quarters, hinting at a slowdown in industrial production in the country
* Power companies’ combined adjusted net profit was up 2.2 per cent Y-o-Y in Q1FY26, as against 17.8 per cent Y-o-Y growth in Q4FY25
* Capital goods and construction firms also reported a slowdown in their revenue and profit growth in the quarter, tracking investment slowdown in the economy
* Capital goods makers’ net sales were up 7.3 per cent Y-o-Y, growing at the slowest pace in the last three quarters, while construction firms’ net sales growth declined to a five-year low of 7.7 per cent in Q1FY26
* Their combined net profit was up 5.4 per cent Y-o-Y in the quarter, the worst show in the last four years, while construction firms’ earnings growth slowed down to a 10-quarter low of 12.6 per cent Y-o-Y
Oil & Gas
- Oil & Gas companies reported strong double-digit growth in earnings in Q1FY26 despite muted revenue growth
- They gained from a Y-o-Y and sequential decline in international crude oil prices while retail fuel prices were largely unchanged
Their combined net sales was up just 0.1 per cent Y-o-Y in Q1FY26 but adjusted net profit was up 25.4 per cent Y-o-Y in the quarter
- Reliance Industries’ net sales were up 5.1 per cent Y-o-Y in Q1FY26 while its net profit was up 78.3 per cent Y-o-Y, thanks to gains from other income. Its like-to-like PBT was up 14.4 per cent Y-o-Y in the quarter under review
- Public sector oil marketing companies such as Indian Oil, BPCL and HPCL reported a sharp jump in earnings despite a Y-o-Y dip in June quarter revenues
