India Inc Posts Muted Q1 Earnings, Led by Pharma, Real Estate, Metals, and Capital Goods
The Q1 earnings season has ended, and India Inc has posted a muted quarter in line with expectations, with growth adversely affected by OMCs. Notable contributions were witnessed from the Healthcare, Real Estate, Capital Goods, and Metals sectors.
India IncQ1 EarningsPharmaReal EstateMetalsCapital GoodsBankingAutoFmcgItHealthcareReal EstateAug 20, 2024
Notable contributions, it added, were witnessed from the Healthcare, Real Estate, Capital Goods, and Metals sectors. In contrast, earnings growth was adversely affected by OMCs.
The banking sector reported a soft quarter amid tepid business growth, NIM moderation, and a slight increase in provisioning expenses, mainly for private banks. NIM contracted for most banks as cost pressures persisted amid intense competition for liabilities and continued pressure on CASA mix.
The auto sector, on the other hand, saw a decent YoY growth, with most companies, except for commercial vehicles and tire plays, performing well. MOFSL said that OEMs reported around 10 per cent YoY volume growth in Q1FY25, with nearly all the OEMs contributing to this broad-based growth.
The long-anticipated rural consumption recovery shows promising signs for the FMCG sector. While FY24 earnings growth was driven by price increases, volume-led growth is expected to be the norm going forward.
The IT services companies reported healthy performance in Q1FY25 with a median revenue growth of 1.2 per cent QoQ CC. With a mild recovery in discretionary spending among BFSI clients, their focus is now transitioning from the cost-takeout deals to “high-priority” transformation deals in some pockets.
The profitability in the Healthcare sector was driven by lower raw material costs, reduced intensity of price erosion in US generics, and launch of niche products.
Of the 24 sectors under its coverage, 7 sectors reported profits above estimates, 11 recorded profits in line with expectations, and 6 posted below estimates profits. Further, of the 263 companies under its coverage, 77 exceeded profit estimates, 113 posted a miss, and 73 were in line.
Going forward, MOFSL anticipates the earnings momentum to continue; albeit, the magnitude of its growth is likely to moderate to around 15 per cent over FY24-26.
Meanwhile, Elara Securities said, “We maintain our positive stance on Autos, Capital Goods, FMCG, Energy, Pharma, and Real Estate. Our outlook is negative for Cement, Chemicals, and Metals, while remaining neutral for other sectors.”
Motilal Oswal Financial Services Limited (MOFSL) is a leading financial services company in India. The company provides a range of financial services, including brokerage, investment banking, and asset management.Elara Securities is a leading brokerage firm in India, providing research-based investment advice to its clients.
Frequently Asked Questions
What were the notable contributors to India Inc's Q1 earnings?
The Healthcare, Real Estate, Capital Goods, and Metals sectors were the notable contributors to India Inc's Q1 earnings.
Which sectors were affected by OMCs?
The earnings growth was adversely affected by OMCs.
What was the performance of the banking sector in Q1?
The banking sector reported a soft quarter amid tepid business growth, NIM moderation, and a slight increase in provisioning expenses, mainly for private banks.
What was the performance of the auto sector in Q1?
The auto sector saw a decent YoY growth, with most companies, except for commercial vehicles and tire plays, performing well.
What is the outlook for the earnings momentum going forward?
MOFSL anticipates the earnings momentum to continue; albeit, the magnitude of its growth is likely to moderate to around 15 per cent over FY24-26.
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