Q1 earnings wrap: Green shoots, red lines
Mint takes a look at the key sectoral themes that emerged from the Q1 show: The overall earnings growth was driven by domestic cyclicals—firms that alternate between periods of high and low profit—such as automobiles and banking, financial services and insurance (BFSI), underpinned by robust demand and credit growth. There were improved contributions from healthcare, real estate and capital goods. Conversely, earnings growth was weighed down by global cyclicals such as oil and gas, where firms suffered an up to 90% plunge in profits, along with metals, cement and specialty chemicals.
Nifty PAT growth was around 6%, aided by 12% growth in the BFSI segment. Robust profits notwithstanding, banks continued to see deposit growth lagging credit expansion. The ‘war for deposits’ is forcing lenders to hike interest rates, which is putting pressure on their net interest margins.
Net interest income growth was weak for the sector on expected lines. While loan growth remained healthy, there was some moderation compared with the past few quarters. Credit demand was led by retail and MSMEs, while the corporate loans saw rising competition.
Asset quality remained broadly stable, but retail and agri slippages saw a seasonal spike. Read more: India aims to be global arbitration hub. And cut costs for its biggest litigant Consumer goods firms saw muted revenue growth due to a severe heatwave in Q1, food inflation, rising competition from regional players and the impact of the general election.
Most firms reported a gradual pickup in rural demand, which is expected to outpace urban. Overall volume growth remained in single digits. Easing raw material costs boosted margins.
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