Q2 Earnings Scorecard: Which sectors outperformed and which fell behind?

ET Intelligence Group: The trend in the September quarter results season so far is marked by robust double-digit growth in revenue and net profit. The impact of input cost inflation has been offset to some extent through higher product pricing and focus on premiumisation. Sectors including automobiles, banking and finance, capital goods, and metals reported double-digit revenue and profit growth whereas cement, IT, and pharmaceuticals showed weakness.

Automobiles

Hits: Maruti Suzuki India‘s (MSIL) year-on-year wholesale volume growth of 38% surpassed the 29% growth for the sector thereby helping the company to increase market share by over 220 basis points to nearly 41%. Bajaj Auto posted 41% exports growth. TVS Motor Company reported record quarterly exports of 5.4 lakh units.

Misses: Though MSIL contributed over half to the exports of passenger vehicles from India, its September quarter exports were weak due to geopolitical issues. Companies reported 1-2% sequential input cost inflation.

Outlook: A weak monsoon and input cost inflation have led M&M to reduce the expected sector-level tractor volume growth for FY27. The sector’s overall profitability will continue to depend on commodity prices and currency fluctuations.

Revenue change (YoY): 30.3%

Net profit change (YoY): 13.1%

Banking

Hits: Asset quality remained stable across the board with no major deterioration. State Bank of India (SBI), the country’s largest bank, surprised with 11 basis point sequential improvement in net interest margin at 3.1%.Misses: Higher business acquisition cost kept operating costs elevated for SBI. HDFC Bank‘s NIM contracted by 10 basis points sequentially to 3.2% while that of ICICI Bank fell 18 basis points to 4.2%.

Outlook: Though credit growth is expected to remain healthy, it may moderate due to a higher base. NIMs are expected to show recovery in the second half of FY27. SBI is likely to deliver FY27 NIM above its 3% guidance.

Revenue change (YoY): 12.5%

Net profit change (YoY): 23.5%

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Capital Goods

Hits: L&T clocked record quarterly orders worth ₹1.5 lakh crore while reporting double-digit revenue and profit growth. Demand from the renewable and conventional energy sector remained strong during the quarter.

Misses: Profitability was under pressure due to material cost inflation. L&T’s operating margin before depreciation and amortisation (Ebitda margin) fell 130 basis points to 8.7%.

Outlook: A growing prospective order pipeline amid improving project execution augurs well for the sector. L&T retained the FY27 revenue growth guidance of 10-12%.

Revenue change (YoY): 20.4%

Net profit change (YoY): 10.7%

Cement

Hits: Ultratech’s quarterly volume growth of 13.8% year-on-year surpassed the estimated sector-level growth of around 10%. Its blended realisation improved 5% year-on-year and helped in margin improvement despite input cost pressure

Misses: Ambuja Cement’s revenue remained flat year-on-year as blended realisations dropped 0.9%. Higher prices of petcoke, diesel and packaging materials weighed on margins.

Outlook: Cement prices are likely to recover in the second half of FY27, aided by construction demand. Ultratech’s proposed capacity expansion to 242 million tonnes per annum (MTPA) from around 210 MTPA is likely to help in widening regional footpront.

Revenue change (YoY): 11.4%

Net profit change (YoY): -57.5%

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Consumer

Hits: HUL and ITC‘s non-cigarette business reported the strongest sales growth in 14 quarters. For ITC, FMCG revenue growth was in double digit for the fourth consecutive quarter.

Misses: ITC’s cigarette segment revenue dropped 21% year-on-year amid higher taxes. D’Mart’s gross margin was under pressure due to its inability to pass on higher input costs amid intense competition.

Outlook: The trend in rural demand amid monsoon shortfall wll be a crucial factor. Cost control, premiumisation, and judicious pricing strategies will be essential to navigate commodity fluctuations.

Revenue change (YoY): 16.1%

Net profit change (YoY): -1.5%

Information Technology

Hits: Infosys reported a mega deal win worth $2 billion taking the total contract value (TCV) for the quarter to $5.2 billion, the highest since the September 2023 quarter. Top companies reported sustained AI deal flow during the quarter.

Misses: Despite winning a mega deal during the quarter, Infosys reduced the revenue guidance band for the full year, citing increasing competitive intensity. Wipro‘s TCV for new deals fell 23% sequentially to $2.6 billion due to client-side delays.

Outlook: The sector-level revenue momentum is likely to remain modest as global demand remains cautious. Wipro expects the delayed deals to close in the December quarter, which should improve the TCV level for the quarter.

Revenue change (YoY): 13.8%

Net profit change (YoY): 13.5%

Metals

Hits: Hindustan Zinc posted 77% year-on-year revenue growth while net profit more than doubled, aided by higher commodity prices and strong sales volume. JSW’s like-to-like volume grew by a strong 13% year-on-year. Tata Steel‘s domestic Ebitda jumped 10% following a robust 16% volume growth

Misses: For ferrous companies, realisations softened in the September quarter sequentially due to lower long steel prices. JSW Steel‘s Ebitda margin fell 120 basis points sequentially to 18.6%. Tata Steel UK’s Ebitda loss continued due to lower deliveries.

Outlook: Domestic steel realisations are expected to improve in the second half of FY27. However, higher coking coal prices are expected to affect profitability in the near term. JSW Steel expects to double the capacity to nearly 80 million tonnes by FY32, which offers revenue visibility assuming a sustained demand trend

Revenue change (YoY): 28.7%

Net profit change (YoY): 101.3%

Pharma

Hits: Domestic business remained strong during the quarter. Sun Pharma‘s India business grew 17% year-on-year, aided by semaglutide products.

Misses: Lower Revlimid sales in North America, weakness in the API business, and higher operating expenses impacted the performance of Dr. Reddy’s Lab. One-off acquisition-related and litigation settlement costs weighed down Sun Pharma’s profitability.

Outlook: The US generic pricing pressures, litigation costs, and regulatory scrutiny remain the primary near-term risks. Sun Pharma has maintained the FY27 guidance of high single-digit revenue growth on account of continued traction in specialty products. For Dr Reddy’s, earnings recovery will hinge on the successful relaunch of generic semaglutide, the ramp-up of abatacept biosimilar in the US and growth in its domestic formulations business.

Revenue change (YoY): 14.4%

Net profit change (YoY): -5.7%