Listed companies grew June-quarter revenue at the fastest pace in years, and still lost margin
ET's sample rose 19.4 percent. Business Standard's rose 18.4 percent. In both, input costs did the damage.
Two different samples, same picture. ET Intelligence, looking at 3,589 companies, said India Inc's June-quarter revenue grew 19.4 percent year on year, the strongest in at least nine quarters. Net profit grew 11 percent, the slowest in a year. Operating margin for the full sample contracted to 16.6 percent from 19.6 percent a year earlier.
Business Standard, on 3,458 listed companies, put revenue growth at 18.4 percent to about Rs 47.27 trillion, the fastest in 15 quarters, and adjusted net profit up 16 percent to about Rs 4.58 trillion. Strip out banks and finance and the operating margin fell about 200 basis points to 16.9 percent, the lowest in 13 quarters. Raw material and power costs at non-financial firms rose 29.5 percent, faster than their sales.
The split underneath is familiar. Auto, banking, metals and pharma carried ET's revenue number. Business Standard said banks, NBFCs and mining and metals accounted for 66 percent of the year-on-year profit increase. Hindalco's profit more than doubled on aluminium prices after the Iran war disrupted supply. Oil and gas went the other way: revenues up on energy prices, profits down 22.6 percent on fuel marketing losses and LPG under-recoveries. Excluding lenders, ET's profit growth shrank to 5.4 percent. Excluding oil and gas, it jumped to 20.9 percent.
Smaller companies did better than the index heavyweights. Feroze Azeez at Anand Rathi Wealth said Nifty 50 EPS grew 11 percent, while Midcap 150 and Smallcap 250 grew 34 percent and 36.4 percent.
Top line is fine. The squeeze is the story. Companies burnt cheaper inventory this quarter, and Vinod Nair at Geojit said that cushion fades in September as costlier stock hits the P&L. Festivals and weddings are supposed to help. So is premiumisation, which is a polite way of saying you raise the price and hope the customer stays.
For anyone watching the Nifty, the 11 percent profit number is the one that sits next to valuations. The midcaps are running hotter, which is either a broader recovery or a reminder that the easy earnings are not in the names everyone already owns.
Analysts at Motilal Oswal said the beat-miss ratio is still favourable, and they have nudged FY27 Nifty EPS up a fraction. Commodity prices, the monsoon, and whatever happens to oil if Hormuz stays shut will decide whether this quarter was a peak or a base.