Nifty 50’s Revenue Growth May Stay in Single Digits for Fourth Straight Quarter
The Nifty 50 index is expected to witness single-digit revenue growth for the fourth consecutive quarter, with estimates pointing to a 9.8% year-on-year increase for the March 2025 quarter.
- The moderation in growth is attributed to a high base effect, as the corresponding quarter last year had seen revenue and net profit growth of 10.6% and 31.9% respectively.
- Despite the deceleration, banking, financials, select automobile, and pharmaceutical companies are projected to lend resilience to the overall topline.
While net profit is projected to grow 7.8%, the momentum has cooled following two quarters of double-digit growth.
- This subdued pace is mainly due to normalizing margins and persistent cost pressures in certain sectors.
Sluggish Earnings Momentum Beyond Core Sectors
According to Gautam Duggad of Motilal Oswal Financial Services, the aggregate earnings of the companies under coverage may see just 1% year-on-year growth, but excluding oil & gas and metals, growth is expected to be a healthier 5%.
- This divergence reflects the sector-specific challenges weighing on commodity-linked businesses.
Operating margins are expected to see a marginal contraction of 10 basis points, settling at 20.8% for the March quarter.
- Metals, telecom, and healthcare are expected to support margin stability.
- However, oil & gas and cement sectors may dilute overall profitability.
Key Macro Trends Influencing Growth Outlook
In the medium term, tariff-related uncertainties, geopolitical risks, and commodity price volatility remain key concerns.
- Conversely, rural demand recovery and increasing government capex offer tailwinds.
Vinit Bolinjkar of Ventura highlights that continued public spending, especially in railways, roads, and defence, may catalyze growth in infrastructure and capital goods.
- However, a slowing global economy could dent performance in export-heavy sectors like IT services, specialty chemicals, and textiles.
Automobiles: Mixed Performance with Bright Spots
The auto sector delivered a mixed performance during the quarter, with two-wheeler and passenger vehicle (PV) volumes rising by 5–6% year-on-year.
- Retail discounts largely stayed flat or fell slightly as inventory piled up.
- Companies such as Mahindra & Mahindra and Eicher Motors are expected to post double-digit earnings growth, aided by improved operating leverage.
Banking: Slower Credit Growth, Margin Squeeze
The banking sector saw credit offtake slow to 11%, down from 16% in the year-ago period.
- Meanwhile, deposit growth remained moderate at 10%, failing to keep pace with loan growth.
- Net interest margins may face pressure as loan yields soften, while deposit rates stay elevated.
Capital Goods: Order Flow Strong but Margins Strained
Capital goods companies, especially L&T, benefitted from strong order inflows, including a large overseas contract in the power sector.
- However, elevated input costs may compress margins despite robust topline momentum.
Cement: Volume Growth Offsets Profit Decline
A revival in construction activity led to stronger cement demand and pricing in Q4.
- Cement volumes, excluding acquisitions, likely grew by 6%.
- Still, profitability at the aggregate level is expected to decline, with single-digit revenue growth for large players.
Consumer Goods: Price-Led Growth amid Urban Weakness
Urban demand remained muted, while rising input costs pressured consumer goods makers.
- Revenue growth is likely to stay in single digits, with most gains coming from price hikes rather than volume increases.
Infotech: Discretionary Spending Tapers Off
The tech sector, after two quarters of recovery, is facing a slowdown in high-margin, discretionary projects.
- Top IT exporters may report a sequential decline in dollar revenue.
- A 2.5% rupee depreciation may cushion results in local terms.
Metals: Mixed Trends across Ferrous and Non-Ferrous
Steel producers are expected to see sequential improvement, driven by higher volumes and modest price hikes.
- However, year-on-year performance may remain weak due to last year’s stronger base.
- Non-ferrous companies, on the other hand, are likely to report better growth supported by firm global prices.
Pharmaceuticals: Healthy Growth Supported by Chronic Care and Rupee Tailwind
The pharma sector is poised for double-digit revenue growth year-on-year.
- Companies with a domestic focus stand to gain from steady demand for chronic therapies.
- US-focused firms may see soft demand, but benefit from a weaker rupee, enhancing export earnings.
Overall, the Nifty 50’s March quarter is shaping up as a moderate growth phase, driven by select sectors, even as base effects, global headwinds, and sectoral challenges cap upside.
