Indian Q1 Earnings Set for 10% Growth, Strongest in Four Quarters
India's June-quarter earnings season is showing signs of a broad recovery, with aggregate corporate profit expected to grow 10% and early reporters from the banking and manufacturing sectors delivering strong bottom-line improvements.
India’s corporate earnings are on track to grow around 10% in the June quarter, marking the strongest expansion in four quarters. The reporting season, which kicked off with Tata Consultancy Services on July 9, reached a peak today with 41 companies across IT, financial services, FMCG and manufacturing posting results.
Financial stocks dominated the early gains, highlighting resilient domestic demand. HDB Financial Services climbed 5% after net profit rose to Rs 785 crore from Rs 568 crore, driven by a 20% increase in net interest income. Jana Small Finance Bank also posted a 52% surge in net profit to Rs 155 crore. South Indian Bank reported a 17.3% rise in net profit to Rs 378 crore, even as net interest income fell 13%, with investors likely drawing comfort from a sharp improvement in asset quality as net non-performing assets dropped to 0.26% from 1.29% in the prior quarter.
The broader industrial and consumer landscape showed pockets of margin-driven strength. Polycab India posted a consolidated net profit of Rs 784 crore on revenue of Rs 8,210 crore. DB Corp reported a 24.1% increase in net profit to Rs 100 crore, expanding its EBITDA margin to 22.6% and declaring a Rs 5 per share dividend. However, Sterling & Wilson Renewable Energy served as a reminder that revenue growth remains elusive in some capital-intensive sectors; despite a 69.4% jump in net profit to Rs 54.2 crore, a 9.7% drop in revenue sent shares down over 5%.
IT sector faces AI pressure
Attention now turns to the IT services sector, where Wipro and Tech Mahindra are set to report later today. Analysts expect Wipro to post a 12% year-on-year increase in revenue, though this is largely attributed to acquisitions and currency tailwinds rather than an improvement in its core business, which remains sequentially weak. Tech Mahindra is forecast to show roughly 1% sequential constant-currency revenue growth, supported by telecom deal ramp-ups, with margins potentially benefiting from cost optimisation.
The IT previews land against a global backdrop of surging AI demand. TSMC's market value surged 77% to $706.6 billion, beating forecasts of $632.6 billion, prompting the chipmaker to announce a $100 billion investment in the United States and raise its annual capital spending target by up to 14%.
Not all results were positive. Newgen Software Technologies posted a stark decline, with net profit falling 40.9% to Rs 62.8 crore and revenue dropping 21.2% to Rs 357 crore. Its EBITDA margin collapsed to 13.1% from 31.5%, suggesting operational challenges that investors will monitor closely as the season progresses.
