Reliance Industries put up a stellar show in the June quarter but the rest of the early birds — 156 companies have declared their results so far — turned in a rather ordinary performance.
Operating margins were under pressure and it is the ‘other income’ that has boosted the bottom line. The aggregate numbers would been worse had companies like Ola Electric been included — Ola’s losses widened to Rs 430 crore as revenues plummeted 50% y-o-y.
Excluding RIL, the early birds reported a 4% year-on-year rise in sales and a 1% drop in operating profits. Including RIL, the operating profits went up by 1% on the back of a 5% increase in revenues. RIL’s revenue from operations rose 5.3%, led by a good show in retail and digital services. The ebitda (earnings before interest tax, depreciation and amortisation) went up by 10%, a shade below estimates.
Mixed Bag Across IT, Banking, and Retail
As in previous quarters, many companies have managed to protect or expand profit margins by reining in costs, despite subdued revenue growth. A case in point is JSW Steel which grew its operating profits by 38%, thanks to a fall in expenditure, although revenues were flat.
Numbers from the IT pack were disappointing with deal wins being a redeeming feature. Revenues at TCS fell 3.3% sequentially in constant currency terms, missing estimates but the company managed to improve its operating margins by 30 bps q-o-q. Wipro reported a 2% sequential fall in revenue but the EBIT margin declined 20 bps q-o-q missing estimates. TCS’s deal wins for the quarter were reasonably good at $9.4 billion. Wipro too reported a stellar total contract value powered by two mega deals. HCL Technologies reported a revenue decline of 0.8% in constant currency terms, in line with estimates, but ebit margins contracted 170 bps sequentially.
Results from the banking stable were mixed. ICICI Bank posted strong numbers with net profits rising 15.5% on the back of a 12% increase in loans. HDFC Bank reported weak numbers with gross advances rising 6.7% y-o-y. Axis Bank’s results were disappointing. Profits fell 4% y-o-y despite a 15% increase in operating profits as provisions nearly doubled and asset quality deteriorated. Loan growth was a modest 8%. On the other hand, Indian Overseas Bank did well to report a 41% rise in operating profits driven by an increase of 12.5% in the net interest income. The lender’s gross advances went up by 14.05 %.
Retailers, FMCG Face Margin Pressures
Retailer Avenue Supermarts reported weak numbers with same-store-sales growth decelerating to 7.1%, from 8.4% in FY25. Gross margins of 15.3% were uninspiring due to an adverse merchandise mix and intense competition in the FMCG category. Consequently the ebitda margins were down 74 bps y-o-y. The management observed that revenue growth had been impacted by 100-150 bps due to high deflation in several staples and non-food products.
On the other hand, Shoppers’ Stop fared well after many weak quarters, narrowing its losses. The retailer’s revenues increased by 8.6% y-o-y in with the average transaction value (ATV) rising b”6%.
Hindustan Zinc reported a 2% y-o-y decline in operating profits and a 4.7% y-o-y drop in net profits. This was due to smaller volumes and lower zinc prices which resulted in a fall in revenues of 4.4%.
Ceat’s 10.5 % y-o-y rise in net sales could not help protect gross margins which contracted 250 bps y-o-y due to higher raw material costs. This drove down net profits by 23%. Just Dial’s revenue growth was a modest 6.2% y-o-y driven by a 1.7% y-o-y growth in realisations and 4.3% y-o-y growth in paid campaigns. Analysts pointed out, the implied billings growth of 0.6% was muted and sharply lower than the previous run-rate.