Wrapping up 1Q results - Slowing revenues, expanding margins

This Week In Earnings #4

Welcome back to This Week in Earnings. As we wrap up the Q1 FY26 results season, let’s take a bird's-eye view of the growth story across sectors for this quarter.

India Inc started FY26 on a slow but steady note. Aggregate revenue growth moderated, but profits held up better, thanks to sectoral outperformance in energy and commodities.

Revenue growth for listed firms slowed to 6.5% YoY in June, but PAT rose 9.4% and EBITDA 10.7%, courtesy of margin gains in select sectors.

Energy and commodities brought the heaviest lift this quarter. OMCs reported bumper profits as marketing margins stayed unusually high despite frozen pump prices (ToI). Utilities and infra added stability to this mix. Renewables and transmission capacity additions supported strong earnings momentum (JSW Energy PR, Adani Energy Solutions PR), while ports grew on volumes, with APSEZ handling 121 MMT (+11% YoY) (Deccan Herald).

Financials and consumption, however, showed mixed patterns. While banks remained profitable, they faced continued NIM compression, with FY26 pressure likely easing up by H2 for a potential recovery. FMCG staples showed early signs of volume recovery, although beverages were weather-hit.

IT services continued to face cautious discretionary demand, though large-deal bookings remained strong at TCS and Infosys. Real estate softened on an industry level with home sales down by ~14% YoY, even as branded developers outperformed.

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We’ll now dive into each sector in detail, while also looking at the major players in each.

Consumer Discretionary

The Apr–Jun 2025 quarter delivered a patchwork performance across India’s consumer discretionary space as pockets of exceptional growth sat alongside segments facing seasonal or competitive pressures. But the broader picture showed stability, especially in premium and export-linked verticals.

Jewellery & Electronics

These subsectors drove the upside of this stability. Titan reported a 52.4% PAT jump, buoyed by strong festive demand—Akshaya Tritiya, weddings—and a consumer shift toward plain gold at higher ticket sizes (BS). Kalyan Jewellers echoed this trend. Dixon Technologies led electronics manufacturing with a near doubling of revenues (+95.1% YoY), thanks to its growing volumes in both smartphones and feature phones (ICICI Direct Report).

Paints & Electricals

Both of them struggled. Asian Paints saw flat revenues and a 5.9% PAT decline, citing weaker seasonal demand due to early monsoons and “intense” competition (ET). Havells faced similar headwinds, with unseasonal rains and a shorter summer denting sales of cooling products. Their cable and wire segments, however, remained firm (BS).

Retail

This subsector stayed buoyant, though profitability diverged. Avenue Supermarts (DMart) clocked 16.3% YoY revenue growth, but PAT was flat at –0.1% due to deflation in staples and heightened competition (BS). Trent posted more balanced results with PAT up 8.6%, driven by expansion in its Zudio and Westside formats (Mint).

Food Delivery & Quick Commerce

These platforms posted strong revenue growth but weak bottom-line results. Swiggy’s revenues rose ~54% YoY, while Eternal (formerly Zomato) posted a 70.4% increase. Yet profitability remained under strain, as Eternal’s PAT fell 90.1% YoY, attributed to heavier Blinkit-related spending (ToI), and Swiggy’s losses widened due to higher marketing and Instamart investments (Reuters).

Real Estate

Despite broader housing market softness, real estate developers turned in a strong quarter. Macrotech Developers (Lodha) saw PAT grow by 41.9%. This came even as pan-India housing sales fell 14–20% YoY in Apr–Jun 2025 due to affordability pressures (ET, ToI).

Taken together, the sector’s aggregate performance underscores the divergence across verticals. Revenues rose 8.2% YoY, but profit growth was modest (PAT +1.8%) and operating margins softened (EBITDA –2.7%).

Structurally, consumption in durables and retail is likely supported by premiumisation and formalisation (ICRA), while electronics growth is mostly driven by the government’s PLI-linked push into smartphone exports (PIB Report). Realty trends suggest consolidation towards larger, branded developers and demand skewed to higher-ticket homes (Realtynmore).

Commodities

The Q1 FY25 quarter saw commodity sector profits rebound even as revenue growth remained mixed. Ferrous metals led the charge, with steelmakers benefiting from lower coking coal costs and stable domestic prices (ET). Cement companies continued to deliver on volume and pricing strength, while non-ferrous players posted varied outcomes amid global price pressures (ET).

Steel

Steel earnings were the clearest driver of the rebound. Tata Steel’s revenues dipped 2.9% because of planned maintenance shutdowns at Jamshedpur and NINL, which weighed on deliveries (ToI), but PAT surged 118.5% thanks to better realisations and internal cost control (Mint). JSW Steel posted flat revenues and a 154.8% increase in PAT because of volume gains and reduced coking coal expenses (JSW Steel PR). SAIL reported stronger top-line growth, with an 810.5% jump in PAT, helped by easing input costs and steady domestic demand (Reuters). Jindal Steel & Power saw revenues fall, but PAT rose 11.8% YoY, supported by firmer average selling prices and softer coal costs (PL Capital Report).

Non-Ferrous Metals

Non-ferrous outcomes were mixed. Hindalco reported great results with PAT growing 30.3%. The company had a record downstream profitability and a 1% rise in Novelis shipments, with beverage cans up 8% (Hindalco PR). In contrast, Vedanta’s PAT declined 12.5% due to weaker aluminium and copper prices and a higher tax burden (Reuters).

Cement & Building Materials

This subsector turned in a steady quarter, supported by volume growth and softening fuel costs. UltraTech posted 17.7% revenue growth and a 31.0% rise in PAT, with volumes up ~9.7% (UltraTech Cement PR). Ambuja Cements delivered a strong beat with record quarterly sales as revenues rose 23.8% YoY and PAT 22.8% YoY, aided by a combined recovery in price and volume (Ambuja Cements PR). Grasim, with exposure to both cement and chemicals, reported revenues of ₹40,118 crore (+18.5% YoY) and PAT of ₹2,767 crore (+22.0% YoY), with margin expansion across both segments (Aditya Birla Group PR).

At the aggregate level, the commodities sector’s rebound was clearly profit-led. Revenues rose 6.0% YoY, but PAT jumped 20.8% and EBITDA 16.4%, marking the third straight quarter of strong earnings momentum. Cost structures remained lean, with material costs steady at ~45% of revenue and employee costs at ~6%. Leverage also improved: the interest coverage ratio climbed to 6.0× while interest-to-revenue eased slightly to 2.7%, indicating a stronger balance sheet pattern even in a mixed pricing environment.

Energy

The Apr–Jun 2025 quarter saw energy sector earnings lifted decisively by public oil marketing companies (OMCs), as refining and marketing margins offset weakness in upstream and gas.

OMCs & Refining

This subsector led the quarter. Reliance’s PAT rose sharply on modest topline growth, with improved fuel and downstream product margins as key drivers, with planned refinery shutdowns constraining volumes (RIL PR). Public OMCs delivered bumper profits as petrol and diesel marketing spreads remained unusually strong despite unchanged pump prices. PAT rose 82.9% at IOC, 140.7% at BPCL, and 548.5% at HPCL, with robust marketing margins outweighing weaker GRMs and inventory-related pressures (ToI). IOC, for instance, reported an overall GRM of $2.15/bbl (core GRM $6.91/bbl) alongside strong marketing volumes.

Upstream

Upstream results were mixed. ONGC reported a slight dip in revenues but a YoY rise in PAT, supported by “new well” gas that earns a 20% premium over administered pricing (NSE PR). Coal India remained highly profitable but posted weaker earnings as an early monsoon reduced power demand, curbing shipments and lowering e-auction realisations (Reuters).

Gas & Petrochemicals

The players in these subsectors softened. GAIL reported stable revenues but a decline in PAT due to weaker petrochemical and gas marketing margins (Outlook Business). Petronet LNG’s PAT also fell YoY, with throughput down to 220 TBTU from 262 TBTU a year earlier. Company commentary pointed to lower offtake from the power and fertiliser sectors, though Dahej volumes improved sequentially (Petronet LNG PR).

Refining Loss-Makers

Two refiners bucked the trend. MRPL swung to a loss as GRMs dropped to ~$3.9/bbl and throughput fell, while CPCL also reported a loss with GRMs of $3.22/bbl, citing inventory losses (ToI, Indian Chemical News).

Overall, the energy sector’s recovery was starkly profit-led. Revenues were flat at just +0.3% YoY, but PAT went up 38.6% and EBITDA rose 15.0%, underlining how OMC-led marketing gains drove the quarter.

Sector earnings are likely to remain most sensitive to swings in marketing margins and GRMs. Q1’s OMC surge was primarily driven by outsized retail spreads on petrol and diesel (ET, ToI). Upstream and gas momentum will likely hinge on realised prices and petrochemical margins, while Petronet’s near-term performance will depend largely on power-sector LNG offtake.

Financial Services

This quarter was a mixed one for banks and NBFCs. A clear theme was margin compression, as higher deposit costs weighed on spreads. System-wide net interest margins declined, with net interest income growth modest and public sector banks leaning on treasury gains to offset pressure (BS, BS).

Large Banks

Results underscored the squeeze on NIMs. SBI expanded profits, though NIM stood at 2.90% (domestic 3.02%) and NII dipped 0.13% YoY (SBI PR). HDFC Bank scaled but with lower fee income and elevated funding costs, with reported NIM around 3.35% in the quarter (ET, HDFC PR). ICICI Bank remained a relative outlier with continued profit growth and steady asset quality, even as NIM eased slightly from the previous quarter (Reuters).

Provisions & Taxes

Provisioning and tax expenses were the sharper drags. Axis Bank’s PAT was held back by a “technical impact,” i.e., higher provisions linked to RBI-directed NPA recognition (ET). Bank of Baroda saw domestic NIM compress to 2.91% and reported a YoY dip in NII, consistent with its softer profitability (PAT -26.8%) (BS). PNB’s earnings were pulled down primarily by a one-time tax charge, despite stronger operating income (ET). Canara Bank saw non-recurring treasury gains and ~₹449 crore of additional provisions, factors that weighed on profits even as business growth stayed healthy (Canara Bank). Union Bank managed YoY PAT growth, supported by improved asset quality (ToI).

NBFCs

Outside the banks, NBFCs showed sound growth. Bajaj Finserv reported double-digit growth in both revenues and profits, aided by group-wide momentum in lending and insurance, and sustained AUM expansion at subsidiaries (Bajaj Finserv). Power Finance Corporation (PFC) also delivered strong results, with PAT up ~25% YoY on ~13% loan book growth (PFC India PR).

From a consolidated view, financial services delivered slower growth as margin pressures came through in the numbers. Revenues rose 11.4% YoY, but PAT growth was limited to 4.8%, even as EBITDA rose 14.8% on controlled operating costs. Sector earnings are likely to remain most sensitive to NIM trajectories, particularly the impact of deposit repricing and CASA mix, alongside credit costs (BS).

FMCG

This quarter was largely uneven for FMCG majors, with staples staying strong while edible oil margins compressed, non-alcoholic beverages faced weather-related headwinds, and alcoholic beverages showed diverging outcomes.

Staples

Staples underpinned sector stability. HUL reported a PAT of ₹2,768 crore, with underlying volume growth of ~4%, signalling an early recovery in demand (HUL PR). ITC grew at scale with cigarettes and agri driving the performance as cigarettes revenues rose ~7–8% YoY (ToI).

Edible Oil

These players faced a margin squeeze. Adani Wilmar saw profits down 24% YoY as oil spreads normalised (AWL Agri Business). Patanjali Foods also showed pressure, with PAT down ~31% YoY on higher costs and compressed margins (BS).

Beverages

Non-alcoholic beverages were dented by an early monsoon. Varun Beverages saw revenue down ~2.5% YoY as peak-season sales were softer, but profits held up on cost control and margin discipline (Varun Beverages Ltd. PR).

Alcoholic beverages diverged. United Spirits delivered revenue growth but a PAT decline (~14% YoY) on higher margin and A&P pressure (BS, ET). United Breweries reported revenue −7.4% YoY, PAT +5.9%, supported by a 46% rise in premium beer volumes and 11% growth in overall volumes (United Breweries). Radico Khaitan outperformed with record volumes and strong P&L, propelled by premiumisation in its Prestige & Above portfolio (Moneycontrol).

Sectorally, FMCG showed steadiness in revenues but softer profitability. Revenues grew 10.0% YoY, PAT improved marginally (1.7%), but EBITDA dipped (–0.4%). Sector demand in FY26 is likely to be underpinned by a gradual volume recovery. FMCG revenue growth may improve to ~6–8% on 4–6% volume gains, with premiumisation and a firmer rural backdrop providing additional support (CRISIL Ratings).

Healthcare

The quarter was steady at the topline for healthcare, with most companies posting sales growth. Profitability, however, diverged sharply across players, driven by exceptional items and US generics pricing pressure (BS).

Large-Cap Pharma

This subsector reflected this divergence. Sun Pharma grew sales ~9–10% but PAT fell ~20% YoY primarily due to exceptional items (SCD-044 discontinuation and a litigation settlement at subsidiaries), even as underlying EBITDA improved (Sun Pharmaceutical Industries). Dr. Reddy’s delivered balanced results as US price erosion, notably in Lenalidomide, offset strength in Europe (NRT) and India (Dr Reddy’s PR).

Lupin stood out with profit up ~52% YoY on strong US and India sales and margin improvement (Lupin PR). Cipla posted stable growth, led by a record Q1 for the India business (>₹3,000 cr). (Cipla PR). Zydus Lifesciences maintained scale with EBITDA margin at 31.8% (Zydus Lifesciences Limited PR). Aurobindo Pharma saw PAT decline on lower API sales and softer US revenues, despite improvements in Europe/growth markets (BS).

Mid-Cap Pharma

Trends were equally mixed here. Mankind Pharma’s strong topline (+24–25% YoY) came with PAT down ~18% on higher input and sharply higher finance costs (partly linked to the BSV acquisition) (BS). Alkem Alkem posted double-digit revenue (+11%) and PAT (+~22%), aided by operating leverage and broad-based demand (Alkem).

Healthcare Services

This subsector remained strong. Apollo Hospitals delivered a revenue growth of ~15% YoY, with occupancy levels at ~65% and continued expansion of its hospital network (Apollo Hospitals PR). Biocon was the notable drag, with PAT falling 89.6% YoY due to a high base and one-off gains last year, even as biosimilars and CRDMO businesses grew (Biocon PR).

In aggregate terms, healthcare posted steady revenues (+9.8% YoY) but profitability diverged, with PAT plunging 23.8% even as EBITDA grew 11.6%. Sector earnings are likely to remain most sensitive to US generics pricing and product mix, with price erosion remaining a visible headwind in Q1 (BS). Potential US trade actions bear watching, though limited credit impact is expected on Indian pharma given the system’s entrenched position as a low-cost generics supplier (BS).

Industrials

FY 2026 Q1 was strong for industrials, with infrastructure/EPC execution and electricals providing the main lift and commercial vehicles (CVs) holding steady.

EPC & Infrastructure

EPC players delivered robust growth. L&T reported revenues of ₹63,679 crore, backed by double-digit topline growth and a record Q1 order inflow. The company’s order book stood at ₹6.13 lakh crore as of June 30, 2025, underlining their medium-term execution visibility (L&T). Kalpataru Projects had EBITDA up 39% YoY and PAT up 154% YoY on stronger project progress and margins (ICICI Direct). KEC International showed a ₹34,409 crore order book (plus >₹6,000 crore L1 pipeline) with growth across T&D and civil construction, evidence of a broad-based infra demand (KEC PR).

Electricals & Industrials

These subsectors stayed buoyant. Polycab noted healthy traction across channels and institutions, with cables outpacing wires (Polycab). Apar Industries reported PAT of ₹263 crore, benefiting from a rising premium product mix (~43.5%) and stronger overseas contribution (Apar PR).

Commercial Vehicles

Commercial vehicles provided additional support. Ashok Leyland rode record Q1 CV volumes and EBITDA margins at ~11.1%, supporting YoY profit growth even on modest revenue gains (ET).

Weak Spots

Some players dragged on the sector. BHEL slipped back into losses as rising expenses and weaker EBITDA offset flat revenue (NDTV Profit). NCC posted declines on lower execution, though the order book remained strong (~₹70,000+ cr) (NCC). APL Apollo expanded profits to ₹237 crore, helped by a better mix and cost control despite modest topline growth (Moneycontrol). HAL grew revenue ~11% YoY with a slight PAT dip (~4% YoY).

Sectorally, industrials turned in steady growth, though off the highs of recent quarters. Revenues rose 6.9% YoY, while PAT grew 6.5% and EBITDA 2.5%. Cost ratios stayed largely unchanged, with material costs at ~52% of revenue and employee costs at ~11%.

Sector momentum is likely to remain supported by public capex and strong infra/T&D pipelines. Diversified EPC revenues may grow 9–11% in FY26 on the back of continued capex tailwinds, with T&D investment also sustaining demand for equipment (Crisil Ratings, Crisil Ratings).

Information Technology

The first quarter was mixed for Indian IT. Discretionary spending stayed muted, but large-deal momentum and margin discipline provided some support. There’s a still-cautious demand backdrop, with TCS flagging subdued client spending even as bookings held, while Infosys highlighted substantial deal wins and raised its FY26 revenue growth band.

Top-Tier IT

Top-tier firms showed a balance of resilience and pressure. TCS stayed steady with operating margins at 24.5% and a total contract value of $9.4 billion in Q1 (TCS PR). Infosys outgrew peers and nudged up its FY26 revenue outlook, helped by BFSI strength and $3.8bn net new bookings (Infosys). HCLTech delivered a stable topline, but lowered its FY26 EBIT-margin guidance to 17–18% following a YoY profit decline (HCLTech PR). Wipro’s reported large-deal bookings of $2.7bn (+131% YoY) and ~80 bps YoY margin expansion, helping lift profits on a flattish topline (Wipro PR).

Mid-Tier & Emerging IT

Several mid-to-large peers delivered standout gains. Tech Mahindra saw profits rebounding on ~260 bps YoY margin expansion and $809 million in new deals (Tech Mahindra PR). LTIMindtree posted order inflow of ~$1.63bn, with continued caution in discretionary spending (Reuters). Mphasis benefited from BFSI/TMT stability, with YoY profit up even as sequential profit softened slightly (ET). Coforge was a standout with ~54–56% YoY revenue growth and $507mn TCV, as profit more than doubled YoY (Coforge PR). Persistent continued to ride cloud/product-engineering demand, clocking $520.8mn TCV in Q1 (Persistent Systems PR).

On a consolidated basis, IT sector growth stayed modest, with revenues up 5.5% YoY, PAT rising 6.8%, and EBITDA up 4.6%. Near-term IT demand is likely to remain cautious in discretionary programs, but sector momentum appears anchored in continued large-deal activity and selective BFSI resilience. This quarter’s bookings highlight that while client caution persists, deal inflows remain strong (Reuters, Reuters).

Services

This quarter was mixed but resilient across services. Ports and distribution posted strong prints, aviation profits softened despite demand, logistics had a split performance, and staffing/security players diverged.

Distribution & IT Services

This zone remained firm. Redington showed broad-based growth across segments. Mobility rose 44% YoY, Cloud 41%, and Technology Solutions 21%. Gross margins, however, were tempered by deal mix and execution factors (Redington Group).

Ports & Transport Infra

Transport infrastructure was a clear positive. Adani Ports grew revenue 21% YoY, backed by cargo volumes of 121 MMT (+11% YoY) and a twofold jump in Logistics and a 2.9x increase in Marine business (Adani Ports PR).

Aviation

Aviation faced profitability headwinds. IndiGo saw traffic remaining firm, though yields fell ~5% YoY and expenses rose ~10% YoY, courtesy higher supplementary rentals, repairs, and airport charges (NSE Archives).

Logistics & Airports

These subsectors showed a split performance. Allcargo Logistics reported near-flat revenues but swung to a net loss of ₹99 crore, with costs outpacing topline growth and a notional FX loss of ~₹83 crore (Allcargo Logistics). GMR Airports rode passenger traffic up 3.3% YoY, with domestic traffic growing 2.9% and international traffic 4.6% YoY (GMR).

Staffing & Security

Companies in these subsectors diverged. SIS posted double-digit revenue growth and PAT +44.7% YoY on steady Security Services momentum (SIS India). Quess Corp printed sharp declines with revenue -27.0% and PAT -54.3% YoY. The comparability was affected by the Apr 2025 corporate demerger, even as Professional Staffing stayed strong (Staffing Industry Analysts). TeamLease reported ~12% revenue growth and ~29% PAT growth.

All in all, services revenues grew 10.7% YoY in Apr–Jun 2025, but profits slipped into the red (PAT –2.8%), owing to the divergence across sub-segments.

Near-term momentum is likely to be shaped by:

1. volume-led port/logistics tailwinds, with APSEZ cargo up 11% YoY

2. a distribution mix shift toward cloud/software and premium devices at Redington

3. aviation profitability trends, where yields and non-fuel costs remain the key swing factors through H1 FY26 (Matrubhumi, Crisil).

Telecommunication

The Q1 FY2026 quarter split cleanly between strong ARPU-driven gains at mobile operators and margin pressure in adjacencies such as towers and CPaaS.

Mobile Operators

Mobile leaders showed stability. Bharti Airtel set the tone (PAT +57.3% YoY) with industry-leading ARPU at ₹250 and an improving mix toward higher-value users (Airtel PR). Vodafone Idea remained the laggard: despite ARPU up ~15% YoY to ₹177, the operator continued to lose subscribers and carry heavy liabilities (Reuters).

Towers

These players faced cost pressures. Indus Towers faced a margin squeeze from higher power & fuel, employee and R&M costs, offsetting revenue growth from tenancy additions, with EBITDA margin narrowing to ~54.5% from 61.6% a year earlier (ET, NDTV Profit).

Enterprise & Data Services

This subsector showed topline growth but weaker profitability. Tata Communications posted data revenue +9–9.4% YoY, even as consolidated PAT fell ~35% YoY, showing margin softness despite growth in data services (Tata Communications PR).

CPaaS & Regional Operators

Regional operators and CPaaS delivered mixed results. Bharti Hexacom showed strong revenue, but PAT compression tied to higher network opex and government levies (ET Telecom). Route Mobile saw weakness in A2P SMS and the exit of low-margin business, though sequential gross/EBITDA margins improved sequentially (Route Mobile PR).

Equipment & Smaller Players

Divergent outcomes were seen here. HFCL reported a sharp fall in EBITDA and margins amid a tougher gear cycle (Outlook Business). RailTel stood out with revenues and PAT up 33% and 36% YoY, respectively, on stronger project execution (ET). Vindhya Telelinks delivered a ~99% YoY PAT jump on improved execution (Kotak Securities). Sterlite Technologies highlighted momentum in optical networking with an order book of ~₹4,900 crore (STL Tech PR).

Overall, telecom revenues rose 17.2% YoY in this quarter, while PAT surged 74.1% and EBITDA 27.2%. Near-term sector earnings are likely to be shaped by:

1. pricing and ARPU discipline at mobile leaders, with Airtel’s ARPU at ₹250 a key marker

2. enterprise connectivity and large-deal/data demand supporting carriers such as Tata Communications

3. energy costs and pass-through dynamics at tower companies, which remain critical to margin trends.

Utilities

The Q1 quarter was steady for utilities overall. Large incumbents maintained profit stability with renewables and transmission businesses delivering strong growth.

Large Incumbents

They stayed steady. NTPC reported revenues dipping slightly, but profits rose, supported by steady operations and a sharp rise in other income (~₹756 crore vs ~₹453 crore YoY) (BS). Tata Power extended its profit streak on renewables and T&D strength (Tata Power).

Renewables & Transmission

Growth standouts came from clean energy and networks. JSW Energy delivered one of the sharpest YoY jumps. EBITDA nearly doubled (+~93% YoY), driven by renewable capacity additions and new output from recently commissioned assets, including Mahanadi and O2 Power (JSW Energy). Adani Energy Solutions had a double-digit revenue growth supported by three new transmission lines commissioned and an industry-leading smart-meter rollout (Adani PR).

Merchant & Gas-Linked

Merchant and gas-linked exposures softened. Adani Power flagged lower merchant tariffs and demand amid an early monsoon. IEX data showed day-ahead prices down ~16% YoY to ₹4.41/kWh in Q1, weighing on earnings (ET). Torrent Power saw thermal PLF fall to 39% from 60% YoY on weaker long-term and merchant sales, compressing profitability despite improved distribution performance (Torrent Power).

Networks & Distribution

They remained stable. Power Grid posted stable revenue with profit down ~2.5% YoY on higher expenses; its board cleared a large fundraising/capex plan to support the pipeline (BS). PTC India delivered PAT up ~61% YoY on lower expenses, even as revenue contracted, reflecting margin-led gains in trading (PTC India PR).

Taken together, the Utilities sector showed stable growth. Revenues rose 1.6% YoY, with PAT growing 6.2% and EBITDA declining 1.3%. Cost and leverage data confirm the stability narrative. Material costs stayed steady at ~35% of revenues, with limited volatility across quarters. Employee costs held at ~5% of revenues, while depreciation hovered near 10%, underscoring the sector’s capex intensity. On leverage, the interest coverage ratio softened modestly to ~3.4x in Q1 FY26, but interest-to-revenue remained high at ~9.7%.

Near-term sector earnings are likely to hinge on transmission capex and smart-meter rollouts, renewable capacity additions that lift EBITDA for diversified generators, and the merchant–demand–fuel triangle, where monsoon timing and coal/gas prices remain key swing factors for generation margins.

Diversified

The Q1 FY2026 quarter for diversified companies was shaped more by firm-level factors than a unified sector trend. Chemicals, agri, and logistics supported results for some, while a few sharp drags weighed on the aggregate.

Group Conglomerates

Group-led performance remained steady. Godrej Industries reported revenues of ₹4,460 crore and PAT of ₹725 crore, supported by strong prints across its listed subsidiaries (BS).

Chemicals & Agri

Players here posted mixed but constructive results. DCM Shriram highlighted higher domestic sugar prices, flat ethanol volumes with margin pressure, strong contributions from its Chemicals/Vinyl divisions, and a steady Fenesta section (DCM Shriram).

MNCs & Logistics

Firms here added further support. 3M India had a strong profit print. Balmer Lawrie highlighted Logistics topline +36% / bottom line +83% YoY and record import volumes at CFS-Chennai, offsetting softer bits elsewhere (Balmer Lawrie PR).

Weak Links

A handful of names dragged results. Swan Energy saw a steep decline in profitability, TTK Healthcare had PAT down 58.8% YoY and operating margin narrowing to ~1.2% from ~3.3% YoY (CNBCTV18).

In aggregate terms, diversified companies posted softer results in this quarter. Revenues grew 5.4% YoY, but PAT fell 12.3% and EBITDA contracted 17.7%. Cost ratios showed pressure. Material costs held steady at ~60% of revenue, but employee costs rose to 9.3% (the highest in five quarters). Leverage also looked stretched, with interest-to-revenue at 5.9% and coverage at just 1.7×.

Near-term performance in this basket is likely to remain company-driven: chemicals and agri spreads, plus ethanol pricing, for DCM Shriram; consumer, realty, and agri segments for the Godrej group; and logistics/packaging for Balmer Lawrie.

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That’s it for this week. Next week we will look at how ownership trends for India Inc (or at least the listed universe) changed through the June quarter. And then we will hibernate for some weeks and remerge in the first week of October when the 2Q reporting season starts. We hope to refine this newsletter both in terms of content and especially presentation at that point of time.