Q4 earnings review: The March quarter earnings brought much-needed relief to the Indian stock market, as corporate performance beat Street estimates, led by OMCs, PSU banks, automobiles, healthcare, technology, and capital goods, easing valuation concerns to some extent.
This recovery in performance, after three consecutive quarters of subdued growth, was largely driven by lower input costs and moderating inflation, which supported operational profitability. Although the net profit growth for Nifty 50 companies remained in the single digits — marking the fourth consecutive quarter of such growth since the pandemic (June 2020) — it still exceeded analysts’ projections.
Adjusted net profits of the Nifty 50 index rose 3.7% year-on-year, coming in 3.8% above Kotak Institutional Equities’ expectations. Similarly, adjusted net profits of the BSE Sensex increased 3.6% year-on-year, which was 5.3% above KIE’s expectation of a 1.6% year-on-year decline.
While the reported net income of the Nifty 50 index rose 2.4% year-on-year and 4.8% quarter-on-quarter. Several companies, including Asian Paints, Bharti Airtel, Tata Steel, Dr. Reddy’s, and Sun Pharma, reported extraordinary items in Q4FY25.
Q4 Standouts: Adani Ports, Cipla, and Titan lead the pack
According to Kotak Institutional Equities (KIE), among the Nifty-50 stocks, 28 companies significantly outperformed their net income estimates in Q4FY25. These include Adani Ports, where the beat was driven by strong performance across both port operations and marine/logistics businesses.
Cipla delivered better-than-expected results, supported by strong traction in the US, One Africa, and EM/EU regions. Coal India reported higher other income, contributing to its outperformance.
The brokerage further said that Dr. Reddy’s also benefitted from higher other income, primarily led by forex gains. Eicher Motors outperformed due to increased other income, while SBI reported a strong beat on the back of robust non-interest income.
Tata Steel and Tech Mahindra both posted higher other income and benefited from lower-than-expected effective tax rates. Titan also exceeded the brokerage estimates owing to higher-than-expected revenues, and Trent outperformed due to strong other income.
On the other hand, companies that underperformed KIE’s net income estimates include Asian Paints, which showed weakness across all metrics; Grasim, impacted by a weaker-than-expected performance in its chemicals and VSF businesses; and IndusInd Bank, which reported higher-than-expected losses after recognizing several discrepancies in income and expenses from previous years, leading to a large reversal of past income.
Tata Motors also fell short of estimates, primarily due to lower-than-expected profitability in its Jaguar Land Rover (JLR) business.
At the EBITDA level, companies that exceeded KIE’s expectations were M&M, driven by stronger-than-expected sales and gross margins; Nestle, which reported a solid gross margin print and lower other expenses; and Titan, which again benefited from higher-than-expected sales.
However, some Nifty-50 companies underperformed at the EBITDA level. These included Asian Paints, which continued to show weakness across the board; Coal India, affected by weak volume and realizations; and Dr. Reddy’s, which was weighed down by lower gross margins and higher staff costs.
Further, Grasim, again reflecting pressure in the chemicals and VSF segments, and Maruti Suzuki, where a bunching up of certain expenses impacted performance, according to the brokerage.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
