Revenue for the October-December quarter brought surprising mixed bags across the sector. Revival of rural demand lifted consumer-driven industries, but urban consumption was behind. Banks recorded strong profit growth despite Net Interest Margin (NIM) pressures, and IT companies managed margin expansion amid soft discretionary spending. Let’s break down hits and misses from the third quarter.
car
strike: The rural recovery has fueled demand for motorcycles and tractors, increasing revenues for key players like M&M. New launches in the Passenger Vehicle (PV) and Commercial Vehicle (CV) segments also supported sales momentum. Sales of luxury cars remained strong, benefiting from the trend towards premiums.
Missing: Despite the high average selling prices, volume growth remained lukewarm. Eicher Motors faced margin distortions due to increased marketing spending, and infrastructure challenges have slowed adoption of EVs.
Outlook: As rural demand gains traction, tractors and entry-level bikes are set to promote sales. EV adoption and launching new models will be important growth triggers. However, rising input costs can put pressure on profitability.
Changes in revenue (Yoy): 6.1% Changes in Net Profit (Yoy): -1.2%
that
strike: US BFSI vertical rebounds contribute a third of the revenues of IT exporters and support revenues. Despite the seasonal headwinds, large companies have expanded their margins. Cost optimization measures have helped key players such as Infosys and TCS maintain operational profitability.
Missing: Large-scale transformational transactions remain elusive, with companies like Wipro and HCL Tech seeing greater traction with short-term contracts that usually carry lower margins. Employment activities remained stifled as companies focused on improving usage levels.
Outlook: Growth expectations are being put to stock valuation, but short-term momentum remains restrained. AIRED’s transformational trading and automation investments could drive medium-term growth.
Changes in revenue (Yoy): 6.4% Changes in Net Profit (Yoy): 11.7%
Oil and gas
strike: The higher purification throughput of RIL and the robust purification margin of HPCL provided cushioning against fuel drop. ONGC recorded a surprising increase in crude oil production, which helped to improve global demand.
Missing: BPCL was lacking in refining and marketing margins, but city gas dealers (CGDs) had weakened revenues due to costly gas procurement. Unstable oil prices continued to affect profitability.
Outlook: Stable performance is expected in stable elections where ONGC is likely to hit peak crude capacity by March 2025. Gas price volatility remains a significant risk.
Changes in revenue (Yoy): -0.1% Changes in Net Profit (Yoy): -11.3%
Pharmaceuticals
strike: San Pharma’s strong domestic and emerging market sales were profitable along with milestone revenues from its US partners. Aurobindo Pharma has benefited from expanding its EU business. Dr. Reddy has seen strong biosimilar traction in major markets.
Missing: San Pharma’s US generic business was struggling due to quality concerns, but the rise in Apollo Healthcare pharmacies put pressure on them. The pressure on export prices also affected small players.
Outlook: Despite short-term margin tensions, demand for the US Grebrimid and biosimilar approvals are a precursor to FY2023. The expansion of specialized pharmaceuticals is important for sustainable growth.
Changes in revenue (Yoy): 10.6% Changes in Net Profit (Yoy): 24.3%
bank
strike: PSU Bank recorded low slippages and credit costs, and recorded record profits on the decline in bad debt clauses. Private lenders like HDFC Bank have benefited from the expansion of strong loan books.
Missing: NIM pressure has led banks to compete for deposits amid close liquidity. In the retail segment, credit growth has slowed slightly.
Outlook: Rate reduction cycles in RBI may enhance NIM stress, but tax cuts may improve sediment addition. Corporate lending is expected to increase pace at H2 FY25.
Changes in revenue (Yoy): 12.1% Changes in Net Profit (Yoy): 12.0%
Consumers and FMCG
strike: Rural demand improved, bringing benefits to FMCG players and selecting consumer companies. Asian paints saw traction in its industrial decorative segment. Nestlé and Britannia recorded strong volume-driven growth.
Missing: Urban demand showed signs of fatigue, and operational margins were under pressure. ITC struggled with FMCG, cigarettes and paper margin compression. Input cost inflation was focused on profitability.
Outlook: The budget tax credit could help recover demand in 2024. Premiumization and e-commerce penetration will encourage sector expansion.
Changes in revenue (Yoy): 11.7% Changes in Net Profit (Yoy): 11.6%
Telecom
strike: Mobile data consumption has skyrocketed, and EBITDA margins have been resilient. Airtel surpassed its ally with an ARPU of Rs 245, up 18% from the previous year. The addition of 5G subscribers increased revenue growth.
Missing: Jio’s ARPU increased to Rs 203 at just 11.9% a few years ago, reflecting fluctuating tariff benefits. Vodafone’s idea continued to struggle with high debt and weak cash flow.
Outlook: The next tariff hike is expected at H2 CY25, with the expansion of digital services playing a key role in revenue growth. 5G monetization is the biggest trigger for telephone companies.
Changes in revenue (Yoy): 4.8% Changes in Net Profit (Yoy): 159.2%
cement
strike: Volume recovery after the monsoon slump helped Ultratech and Schlie Cement beat expectations. Cost optimization measures have supported the improvement of EBITDA for selected companies.
Missing: EBITDA margins fell by more than 300 bps compared to the previous year, resulting in a hit in profitability due to lower realizations and lower demand. Rising energy costs remain concerns.
Outlook: Pricing and steady improvements in demand should support growth, and management commentary suggests a better perception of the fourth quarter. Promoting infrastructure from government spending remains a key demand driver.
Changes in revenue (Yoy): 0.8% Changes in Net Profit (Yoy): 13.7%
Conclusion
Restoration of rural demand and cost-effectiveness helped several sectors, but weak urban demand and margin pressures persisted in major industries. With elections behind and policy clarity ahead, companies have banked in 2026 for a wider revival. However, global economic uncertainty and inflation risk remain important variables that can affect growth trajectories.
