Earnings season has opened on a reasonably strong note, with early birds posting a near 14% year-on-year rise in net profits for the March quarter. The robust bottom-line growth comes despite a muted 4.5% increase in net sales, weighed down by weak other operating income.

Even amid pockets of inflationary pressure, India Inc has managed costs effectively. For a sample of 141 companies, including banks and financials, operating profit margins expanded by 102 basis points year-on-year. Among the early standouts are Nestle and Trent, both of which reported around 30% growth in net profits, while Hindustan Zinc posted a sharp 68% jump.

Subdued performance from RIL

In contrast, Reliance Industries delivered a subdued performance, as did IT services majors facing demand headwinds. Infosys’ FY27 revenue guidance also disappointed. Among banks, ICICI Bank reported a relatively strong quarter. Nestle’s performance was driven by aggressive rural distribution expansion, a sharper focus on quick commerce and continued cost efficiencies.

The company reported a healthy 23% year-on-year rise in revenue, led by double-digit volume growth. Despite inflation in key inputs such as milk and edible oil, operating margins expanded by 60 basis points. Trent, too, delivered a recovery quarter. Revenues rose 20% year-on-year, aided by the addition of 22 new stores, after several quarters of slowing growth.

Like-for-like sales in its fashion portfolio improved to low single-digit growth from a slight contraction in the previous quarter. Gross margins expanded by 170 basis points, supported by a pick-up in store additions, particularly in the Westside format. Reliance’s earnings were dragged down by weak performance in its energy business, leading to a 12.6% year-on-year decline in net profit—its weakest showing in 22 quarters.

IT services companies reported lacklustre numbers. While the depreciation of the rupee offered some support, demand pressures and the increasing adoption of AI weighed on growth. TCS posted a modest 1.2% sequential revenue increase in constant currency, with a marginal improvement in margins.

Infosys reported a decent quarter, but its FY27 revenue growth guidance of 1.5%–3.5% in constant currency—lower than the earlier range—signals cautious client spending amid global uncertainty. HCLTech, meanwhile, reported a sequential decline in constant currency revenues, pointing to weak discretionary demand. In banking, ICICI Bank stood out with an 8.5% rise in net profit, driven by low provisions and an 8.4% increase in net interest income.

Advances grew a strong 16% year-on-year. HDFC Bank Ltd reported a softer quarter, with net interest income rising just 3%, although loan growth remained healthy at 12%.

Core pre-provision operating profit growth also came in below expectations. Axis Bank, too, saw a muted performance, with net interest income rising 4.7% and margins contracting both sequentially and year-on-year, partly due to trading losses impacting other income. Among industrials, India Cements reported only a modest 2.6% increase in revenue but returned to profitability in the March quarter, helped by tighter cost control.