Early-bird results reflect earning hiccups despite margin expansion

Early-bird results for the January-March 2025 quarter (Q4FY25) suggest a slowdown in earning growth for India Inc, despite a benign cost environment that has led to an improvement in margins.

- KRISHNA KANT

The combined net profit (adjusted for exceptional gains and losses) of 175 early-reporting companies rose by 3.8 per cent year-on-year (Y-o-Y) in Q4FY25, marking the slowest growth in 17 quarters. Net sales grew by 8.5 per cent, slightly better than the 8.1 per cent Y-o-Y growth rate in Q3FY25, but a sharp decline from the 11 per cent in the March quarter of FY24. This was the slowest March quarter in revenue growth terms for early-bird companies in at least four years.

By comparison, operating expenses for these companies increased by just 2.3 per cent Y-o-Y in Q4FY25.

This was driven by modest single-digit growth in raw materials and employee costs, suggesting a relatively benign cost environment.

Operating profit (Ebitda or earnings before interest, taxes, depreciation, and amortisation) grew by 11.7 per cent Y-o-Y in Q4, while operating margins as a percentage of total revenue expanded by 190 basis points Y-o-Y in the same period.