Banking and IT show muted growth, pharma thrives in March quarter results

ET Intelligence Group: A sector-wise review of the March quarter results so far reveals that the banking and IT sectors reported a muted single-digit net profit growth year-on-year after a series of quarters of double-digit growth. The pharma sector, on the other hand, continued to post strong double-digit growth in revenue and profit.

Automobiles

Hits: Maruti Suzuki India clocked highest ever quarterly sales volume of 604,635 units in the March quarter. M&M reported higher margins across segments while strengthening market share. In addition, M&M’s SUV volume surpassed tractor volumes in FY25. Tata Motors turned net cash positive in the automobiles business in FY25.

Misses: The market share of Tata Motors in the commercial vehicles segment reduced by 200 basis points to 37.1% year-on-year in FY25 amid intense competition. For Maruti, operating margin (EBIT margin) dropped gradually to 8.7% from 11% in the June 2024 quarter due to higher manufacturing costs and increased advertising spending.

Outlook: New model launches and capacity expansions are likely to drive the top line growth for FY26 amid hopes of demand revival. In addition, exports would be another growth factor for Maruti and Hyundai.

Revenue change (YoY): 5.9%

Net profit change (YoY): -25.3%

Banking
Hits: The year-on-year growth in loans and deposits remained in double digits for most of the banks though the rate of growth was lower compared with previous few quarters. Some of the public sector banks continued to report record profits driven by treasury income.

Misses: There was no respite for the net interest margin, which continued to slide, albeit marginally, in the March quarter. Loan loss provisioning increased in double digits for majority of the banks.

Outlook: Given the falling interest rate cycle its lagged impact on deposit rates, the margin pressure is likely to persist in the first half of FY26. A recovery in the corporate loan book is likely in the coming quarters.

Revenue change (YoY): 8.8%

Net profit change (YoY): 3.9%

Cement
Hits: A sustained rural demand pick up and capacity addition helped a double-digit volume growth for some of the companies. For UltraTech, operating profit before depreciation and amortisation (EBITDA) per tonne increased sequentially for the third straight quarter.

Misses: The aggregate EBITDA margin shrank by a tad 20 basis points year-on-year to 17.8% for the March quarter.

Outlook: After a slower pick up in urban real estate demand over the past few quarters, it is likely to improve in FY26. This coupled with capacity addition and a focus on process efficiency by cement makers is likely to drive double-digit capacity growth.

Revenue change (YoY): 5.8%

Net profit change (YoY): 4.4%

Consumer
Hits: Marico reported double-digit growth in revenue and operating profit driven by foods and digital first segments.

Misses: Volume growth for HUL continued to taper year-on-year in the March quarter. EBITDA margin remained under pressure.

Outlook: The short-term profitability is expected to remain subdued amid lower demand offtake across segments. HUL hinted at moderation in gross profitability in the near term. The growth momentum may pick up in the first half of FY26.

Revenue change (YoY): 13.9%

Net profit change (YoY): 21.5%

information technology
Hits: The extent of new deal wins remained robust during the March quarter as companies reported a sustained momentum in the artificial intelligence (AI) driven projects.

Misses: Operating margins remained under pressure for majority of the top companies. Top tier companies also reported rising attrition rates

Outlook: A robust deal flow offers long-term revenue visibility. However, the short-term outlook remains cloudy due to geopolitical uncertainties.

Revenue change (YoY): 8.0%

Net profit change (YoY): 4.0%

Oil and gas
Hits: A recovery in the retail and Jio Platforms segments supported 9% revenue growth of Reliance Industries (RIL). HPCL and BPCL reported better-than-expected performance driven by higher gross refining and marketing margin.

Misses: Weakness in the O2C segment and lower gas output affected RIL’s EBITDa growth.HPLC’s LPG loss increased by 6% sequentially.

Outlook: HPCL aims to use capex prudently and limit the debt-equity ratio in the coming years. BPCL has raised the capex target. RIL looks forward to renewable energy as the future growth driver with significant capex.

Revenue change (YoY): 1.8%

Net profit change (YoY): -2.0%

Pharma
Hits: Revenue and profit growth was driven by traction in the domestic market. Higher gRevlimid sales in the US buoyed Aurobindo Pharma’s performance. For Dr Reddy’s, the recently added nicotine therapy portfolio boosted the performance.

Misses: The US business continued to show muted growth for major pharma companies. Higher tax outgo dented profit in the case of Sun Pharma and Aurobindo.

Outlook: New drug launches will be a key factor to drive growth for FY26 in the backdrop of an expected fall in gRevlimid related sales in the US. Dr Reddy’s expects to drive growth with the help of biosimilars and semaglutide portfolio.

Revenue change (YoY): 12.8%

Net profit change (YoY): 39.3%