The December 2025 quarter earnings season should see India Inc deliver a modest set of numbers. While the performance is expected to be supported by strong results from automakers, metal producers, oil refiners, cement makers and capital goods companies, this is likely to be offset by weaker numbers from IT services majors, banks, electric utilities, pharmaceutical companies and consumer staples firms. Excluding oil marketing companies (OMCs), the aggregate profit growth would be subdued.
Growth Divide
Some businesses benefited from festive and holiday season demand, elevated commodity prices and currency depreciation. However, some companies are likely to see one-time adjustments to employee expenses as companies complied with the new Wage Code.
The big boys will have a tough time. Kotak Institutional Equities (KIE) estimates net profits of Nifty 50 companies to rise just 1.7% y-o-y, which could be the lowest in the post-Covid period.
Automakers are expected to report fairly strong revenue growth, driven by early double-digit volume increases in passenger vehicles, commercial vehicles and two-wheelers following GST rate cuts. Average selling prices have also edged up, albeit in low single digits. Export-oriented companies should benefit from forex gains, while operating margins are likely to expand on better operating leverage and an improved product mix, despite discounts offered by some players.
Provisional updates indicate strong loan growth of 10-12% y-o-y for banks, but revenue growth is expected to be subdued, resulting in largely flat earnings. Net interest margins are likely to remain flat sequentially. While the recovery in advances suggests that slippages, including in unsecured loans, should remain contained, investors will focus on management commentary amid slower deposit accretion, further cuts in lending rates and intensifying competition.
Festive-season demand is expected to have supported credit growth for non-bank lenders as well, though margin trends will vary depending on the extent of transmission of rate cuts and reductions in funding costs.
Results from the consumer staples segment are likely to be mixed. While some companies continue to be affected by the transition to the new GST rate structure, others are expected to report healthy performance. Despite the festive and holiday season, the quick service restaurant (QSR) space appears to have underperformed, with like-for-like growth remaining muted. Platform companies, operating across multiple business segments, are expected to post decent topline growth aided by customer additions and seasonal demand.
Wage Code and IT Furloughs
IT services companies are likely to report modest results in what is typically a seasonally weak quarter. With discretionary spending rising only marginally and clients continuing to focus on cost optimisation, demand recovery remains muted. Furloughs at normal levels are expected to cap sequential revenue growth, with some firms even reporting a decline. While currency depreciation could boost margins by 20-50 basis points, wage hikes may dent margins of mid-tier companies by 30-100 bps. Any changes to revenue guidance will be closely watched.
Cement demand is estimated to have grown 8-10% during the quarter, with some producers likely benefiting from higher volumes following capacity additions through acquisitions.
For OMCs, weak crude prices, lower LPG under-recoveries and government compensation are expected to lift results. Core refining margins remain strong, with operating profits likely to jump 32-40%, according to analysts.
Elevated base-metal prices should support earnings for zinc and aluminium producers, though hedging losses could offset some gains. Steel prices—both long and flat products—remained weak during the quarter, pressuring revenues, while higher coking coal costs added to margin stress. Volumes, however, are estimated to have risen about 12% y-o-y as companies ramped up capacity.