India Inc reported a weak performance in the June 2025 quarter, with banks, IT, and consumer staples dragging overall earnings while cement, autos, defence and hospitals offered some relief. Analysts at Jefferies noted that “earnings growth, excluding Oil and Gas, metals, declined to a post-COVID low of 3 per cent Year on Year.” Jefferies expects a better performance in the September quarter but also cautioned that possible GST rate cuts may postpone a full recovery to the December quarter.
Headline earnings up 8 per cent; FMCG EBITDA margins fall
Jefferies noted that across its coverage universe headline earnings rose 8 per cent year-on-year, supported by oil & gas. However, earnings of domestic companies, excluding oil & gas, metals and exporters, fell 1 per cent as lending financials reported a sharp 9 per cent contraction. Margins also came under pressure.
Consumer companies saw EBITDA margins fall 2.1 percentage points year-on-year, though they improved slightly compared with the March quarter. Industrials reported a small margin increase of 0.5 percentage points. Employee costs grew 7.7 per cent, continuing a trend of sub-10 per cent growth for seven quarters in a row.
Banks under pressure: Loan growth stays muted
Lenders delivered mixed results. Large private banks such as HDFC Bank and ICICI Bank managed to post better earnings, but Axis Bank and Kotak Mahindra Bank disappointed due to higher slippages and credit costs.
Public sector banks reported a steep 28 per cent fall in earnings as net interest margins narrowed. SBI’s margin fell to 2.9 per cent, while Punjab National Bank’s dropped to 2.7 per cent. Loan growth across the banking sector remained soft, and provisions rose as credit costs began to normalise.
IT sector staying weak with sequential revenue decline
The information technology sector remained a weak spot. Revenues fell 1 per cent sequentially in constant currency terms. Only Infosys, Wipro and Coforge surprised on the positive side, while most companies indicated that demand has remained muted.
FMCG margins under pressure from high input costs
Consumer staples or FMCG companies struggled with elevated input costs, which weighed on margins. However their vol growth saw a sequential improvement.
Consumer discretionary majors Asian Paints and DMart posted sluggish earnings, with growth down 6 per cent and up just 2 per cent, respectively, due to weak urban consumption. In contrast, Titan delivered a strong 21 per cent rise in earnings.
Cement EBITDA surges; defence majors post over 25 per cent growth
Cement companies delivered strong numbers, with EBITDA rising 43 per cent year-on-year on steady pricing and 3–4 per cent higher volumes. Auto makers also posted healthy earnings growth of around 11–12 per cent on average. TVS Motor reported a 36 per cent jump in profits, while Mahindra & Mahindra rose 29 per cent.
Defence companies such as HAL and BEL posted earnings growth of more than 25 per cent, helped by margin expansion. Hospitals, including Apollo, Fortis, Max and Medanta, recorded 18 per cent growth in operating profit. Reliance Industries’ EBITDA rose 11 per cent, driven by its telecom business and margin gains.
Jefferies expects earnings recovery from September quarter
Despite the weak June quarter, Jefferies expects the coming quarters to be stronger. A low base, signs of rural demand recovery and the early start of the festive season are likely to lift earnings in September. However, analysts caution that part of the recovery may shift to the December quarter due to GST rate cuts.
Consensus estimates for MSCI India FY26 earnings have been cut by 1.5 per cent this season. Jefferies analysts lowered FY26 estimates for 53 per cent of the companies under coverage, while 37 per cent saw upgrades.
“Stable to positive revisions were visible in cement and IT (excluding TCS and HCL Tech), but banks and consumer companies largely faced earnings cuts,” the note said.
