From a common sample of 3,241 companies that declared results in each of the 13 quarters, net profit rose 14.1% year-on-year, the highest in four quarters while revenue grew 6.8%.
In the year-ago quarter, revenue and profit grew 9.2% and 22.7%, respectively. Analysts expect a revival in FY26 corporate earnings, helped by income tax incentives and lower interest rates. “March quarter earnings performance for the companies under our coverage was above our estimates, mainly led by sectors such as metals, telecom, oil marketing companies and healthcare,” said Gautam Duggad, institutional research head, Motilal Oswal Financial Services.
The sample’s operating margin shrank by a marginal 20 basis points to 17.5% from the year ago. “Some companies, particularly in the consumer and chemicals sectors, reported continued pressure on margins due to either input cost escalations or persistent demand-supply imbalances,” said Vinit Bolinjkar, head of research, Ventura Securities.
The non-operating components including interest charge and depreciation showed a declining trend during the March quarter. For the sample excluding banking and finance companies, interest relative to earnings before interest and tax (ebit) fell by 90 basis points year-on-year to 17.2%, whereas depreciation and amortisation as a proportion of ebitda shrank by 80 basis points to 22.3%.
A basis point is 0.01% percentage point. The banking and finance sector dragged down the sample’s profit growth as the sector reported a low single-digit increase in interest income and net profit amid margin pressure after reporting double-digit growth in at least the eight previous quarters. After excluding these companies, the sample’s net profit growth improved to 20%.It was a mixed bag at the sector level. According to Vinod Nair, research head, Geojit Investments, metals and mining companies outperformed due to higher international prices and supply chain disruptions while the pharmaceutical sector showed strong growth driven by increased sales of complex drugs and lower chemical costs.
On the other hand, the IT, consumer, and auto sectors underperformed due to the global slowdown, weak discretionary spending, and subdued urban consumption. Analysts expect corporate earnings to improve this year.
“Looking ahead, a sense of cautious optimism prevails, pinned on domestic demand recovery and policy support but shadowed by global uncertainties and inflationary concerns,” said Bolinjkar. Duggad expects earnings to strengthen further, supported by a low base in FY25 and improving business fundamentals.
“We continue to focus on domestically oriented sectors amid ongoing global uncertainties and volatility related to trade tariffs,” Duggad said. He’s bullish on banking and finance, consumer discretionary, industrials, healthcare, IT, and telecom, while being cautious about oil and gas, cement, automobiles, real estate, and metals.
According to Geojit’s Nair, anticipated tax incentives and increased government expenditure are likely to stimulate domestic demand. “Currently, earnings growth for FY26 is projected at 10-12%, a notable improvement over the sub-5% growth estimated for FY25,” he said. He expects interest rate sensitive sectors such as banking and finance, auto, and real estate to outperform, driven by anticipated demand recovery, lower operating costs, and reduced business risks.
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