Corporate earnings stumble as weak demand drags growth to multi-quarter lows

markets

Indian corporations have reported their slowest revenue growth in multiple quarters for the June-ended period, as subdued demand and a cooling economy weighed on performance. Market analysts caution that a meaningful rebound in earnings may still be at least a few quarters away.

An analysis by Moneycontrol of 35 Nifty 50 companies—excluding energy, banking, financial and insurance firms—with comparable data for the past 15 quarters shows net sales rising 6.6 percent year-on-year, the weakest since September 2024. Net profit grew 5.3 percent, marking a nine-quarter low, while operating profit rose 7.1 percent, the slowest in two quarters.

A similar trend was evident across the broader market. In the Nifty 500 universe, 388 companies have reported so far, with revenue growth slipping to a three-quarter low and net profit growth to a nine-quarter low.

Among BSE MidCap constituents, 107 companies posted revenue growth of 10.9 percent, the weakest in three quarters, and net profit growth of 5 percent, the slowest in two quarters. In the BSE SmallCap segment, 817 companies reported revenue growth of 7.6 percent, a five-quarter low, while net profit rose 6 percent, the weakest in six quarters.

According to Nikunj Saraf, CEO of Choice Wealth, while revenue and margin expansion remain vulnerable, sharp earnings downgrades from earlier estimates are unlikely.

Consumer goods companies recorded muted volume growth in the first quarter of FY26, with rising raw material costs further eroding profitability. Weak urban demand and intensifying competition were cited as key drags. The automobile sector also faced tepid demand and margin compression.

In the IT services space, growth and profitability remained under pressure due to prolonged weakness in discretionary spending, macroeconomic uncertainties, and delayed client decision-making. Real estate emerged as an outlier, with luxury residential sales and commercial lease rentals boosting revenue and profits. The hospitality and travel sectors outperform all others in both revenue and earnings momentum.

Several mid-cap sectors, including Technology, Capital Goods, PSU Banks, Healthcare, Cement, Metals, and Utilities, delivered robust growth. However, small-cap segments broadly underperformed, with Automobiles and Oil & Gas reporting a year-on-year earnings decline.

Ajit Banerjee, president and CIO at Shriram Life Insurance, noted that macroeconomic fundamentals remain resilient. He expects minimal impact from recently imposed tariffs and pointed to an above-normal monsoon as a positive for kharif crop output, supporting rural demand. The ongoing transmission of lower lending rates, coupled with the upcoming festive season, could spur consumption and aid corporate earnings recovery in the coming quarters.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.​​​