Q3 Earnings Review: Early Trends Not Encouraging

India Inc.'s third quarter earning has not been so far as per script envisaged at the beginning of the financial year. The topline growth has been muted, heightened raw material inflation leading to margin contraction, and profit growth sluggish at best. All this has led to cuts in earnings estimates for the current fiscal and calibration of earnings for financial years 2026 and 2027.Here are the key macro trends so far from the third quarter of FY25:.Earnings have been released for the top IT companies and some of the prominent midcap companies. So far revenue growth has been flat on a sequential basis, margins and earnings have improved led by rupee depreciation even though seasonally weak quarter and furloughs have been had their impact. The fourth quarter commentary is worth forgetting as most companies have guided for short-term pain. Most companies have shown good order book going into the financial year 2026 and that is driving growth optimism for most companies. Though fiscal 2025 is something most cos would like to forget about. .The deposit and advance growth has been muted across the industry with the industry leading itself guiding lower advances in FY25. Even for the FY26 the growth for the industry leader is at par growth. Deposit growth is anticipated to pick up for large players that will drive cost of deposits for small and medium players as they fight over the contracting pool of household savings which is increasingly getting diverted to higher return venues like capital markets. There are signs of increased competition in home mortgage segment as pricing remains competitive and more stress in the unsecured segment. Pricing pressure in home mortgage will lead pressure on net interest margins for housing finance companies. There is also impact of unsecured portfolio as NBFCs have reduced exposure extensively leading to impact on consumption and discretionary spends..ICICI Bank Q3 Review: Analysts Up Target Price After Better-Than-Expected Results.Urban consumption seems the most impacted and getting more pronounced by each quarter. This trend started since March of 2024 when regulators tightened regulations on unsecured loans. This is not impacting consumption patterns. Industry leader HUL says consumers are 'titrating' to smaller packs impacting volume growth. FMCG cos have been able to take price hikes but not to completely offset raw material prices which have starting edging up in the third quarter. Crude and crude derivative based inventory will pose a challenge in the fourth quarter as most companies are sitting on high-priced inventory. HUL claimed that net material inflation, i.e. cost of material after adjusting for supply chain leverage and cost efficiencies, has started to impacted the margins. This is also applicable to other companies where raw material price inflation has surpassed operational efficiencies despite companies managing inventories and operating costs..HUL Q3 Takeaways: Move To Smaller Packs, Demand Slowdown And A Fall In Discretionary Spends.The cement sector has shown a revival in the third quarter. Companies have been able to manage fuel cost efficiently which has helped in better EBITDA per tonne for most cement companies sequentially. The sector is still not out of the woods. Volume improvement together with pricing gains meant revenues grew on a sequential basis in the third quarter. Price increases have been seen in North and South India and they have improved realisation for most cement companies in the region..This sector has tailwind of demand but that may not translate into earnings growth in the near future. Air traffic growth and fleet expansion will see most airline companies posting higher revenue growth. But with more grounded aircraft returning to the air and delivery of new aircrafts pricing will be under pressure. This means yields per seat per kilometer for airlines will be soft. This will impact margins in most of the airlines. Another key factor will be fluctuating foreign exchange. A strengthening dollar will play havoc in the profit and loss accounts of airlines. A depreciated rupee doesn't augur well for international fuel fill-ups and will also impact leasing costs negatively. Companies will try to hedge costs and those with higher quantum of international revenue may find natural hedge for their revenues and operating metrics..IndiGo Remains On UBS Buy List Post Q3 Results; Goldman Sachs Lowers Price Target Amid Forex Jitters.This sector is facing pressure of consumer apathy. Companies have increased prices some twice in January itself. The pricing increase has been as per inventory and demand. High dealer inventory products have seen lower pricing increase and high demand products have seen high price increases. Consumer demand remains muted for entry-level vehicles though Maruti showed some signs of demand pick-up in December in this segment. Volumes have remained muted. Hyundai Motors' global parent has given muted guidance for 2025. As we advance, companies will focus on value growth led by pricing.Electric vehicle launches have seen a pace and a slew of these vehicles will hit the markets beginning end of this quarter and this year. Tata Motors and Mahindra will be in a race to garner market share. The market will see market share loss for Tata Motors as the category expands but newer entrants and newer battery delivery models are set to disrupt this segment. The two-wheeler space is all set to see higher competition with e-bikes and CNG bikes set to compete for the green mobility market shares. Auto component companies which have been hit by global OEMS looking at destocking are likely to revive starting Q1 as some of the global OEMs are on the verge of global destocking. .Auto Expo 2025 — OEMs Focus On Clean Fuels: Motilal Oswal's Analysis.The real estate index has corrected over 20% in January so far. The key reason for the same is market is now looking at revenue conversion from pre-sales data. Real estate sector has been in focus for pre-sales for the last three financial years FY22-FY25.The street has bet on the pre-sales data released by all real estate companies in the last four financial year with companies racing to outdo each other on pre-sales growth. This pre-sales is not getting reflected in either new house registrations or revenues for the companies. Many real estate companies follow standard revenue recognition methodology. Luxury and premium home developers have shown significant increases in their pre-sales numbers in the last three years yet revenue growth has been muted. There is a slowdown in the affordable and middle-income/premium segment and that is being reflected in increase price competition in the home mortgage rates..Rs 100 Crore Of Solitude: Exclusivity Is New Luxury For Mumbai's Elite Homebuyers

Q3 Earnings Review: Early Trends Not Encouraging

From IT sector to real estate, here are the key macro trends so far from the third-quarter of FY25.

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