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Investment bankers are going out on a limb and saying that economically sensitive sectors will show an increase in growth rates in the December quarter, though not all firms are slated do well. Furthermore, investment bankers/Gallup say December growth rates would ease for the listed firms for the seventh consecutive quarter. In addition, year on year (YoY) margins are likely to continue being pressured, translating into a third consecutive quarter of earnings below 10% growth.

Some capital markets experts forecast single digit earnings growth from automobile, banking, construction materials and consumer staples sectors, while penetration rates from pharmaceuticals tops real estate and telecommunication sectors expect healthy profits after tax rates growth.

Earnings season begins with Tata Consultancy Services (TCS), which is one of the major software services provider worldwide, having scheduled the release of its results today. Avenue Supermarts D-Mart will follow through with an earnings release on January 11th 2023.

According to brokerages, the automobile and components sector encounters issues owing to an unfavourable mix of products and bigger discounts offered. The banks are also expected to slow down in loan growth and continue increasing loan-loss provisions, although they expect State Bank of India (SBI) to show good YoY PAT growth due to higher provisions on wage settlements and previous period adjustments.

Strong realisation for construction materials may not be available in the near future, and the emerging sluggish demand in urban centres may hurt consumer staples goods industry. The cities of metals, mining, oil, gas and consumable fuels are anticipated to express reduced or single digit growth in their net income.

In contrast, net income growth YoY for capital goods, diversified financials, pharmaceuticals, real estate, and telecommunications sectors is bound to be impressive. As for capital goods, demand will be substantial, for pharmaceuticals the forecast is a stable price for US generics and growth in other markets, for the real estate better activity in launching will occur, for telecommunications higher average revenue per user ARPU.

According to Kotak Institutional Equities, net profits for the BSE-30 index are likely to increase by 7.2% on a YoY basis in Q3FY25 while the Nifty-50 Index is likely to grow by 9% YoY and 2.2% only on a QoQ basis as well. Furthermore, Motilal Oswal Securities in their report suggests that both toe MOFSL Universe and Nifty-50 will see a earnings increment of 6% YoY each in Q3. Another brokerage firm, Nuvama, also predict growth regarding their coverage universe for aid in Q3FY25 and expect the growth to be around 8% YoY, while it was at 6% in the second quarter of 2025. Such would be the case as top line growth has been below the 10% mark for seven quarters.

On the contrary, a slowdown can be seen as Nuvama, Excludes commodities and BFSI from their coverage and their EBITDA margins stagnate YoY which creates an additional strain on the PATs growth. PAT growth is expected to reach the 9% mark, while it was just achieving the 6% mark in Q2FY25, this is however remarkably lower compared to the growth rate for FY24 which surpassed 20%. The growth of profits in the industries including for furniture commodities, cement, consumer goods, pharmaceuticals are expected to give an annual growth rate that is lower but for the industrials, banks and chemicals the expectation is reversed.

The expectation regarding the growth of the healthcare and telecom companies supporting the lower margin intervals for cement and commodities suggest firmly warm YoY growth of EBITDA margins for the Nifty-50 index, standing at 17.10% but according analysts the Nifty-50 EBITDA margin seems stronger and is set to reach to 20.2% expanding by 30 basis points .

According to the Motilal Oswal Securities report, the BFSI segment will spearhead earnings growth, with minimal constraints placed on technology, capital goods, healthcare, and real estate. The performance of the PSU banks, NBFC- Lending and OTP banks is estimated to grow by 13%, 8% and 2% respectively year on year. On the other hand, the performance of the private sector banks and the PSU banks depicts a worrying situation as the growth percentage has steadily dropped over the last 10 to 13 quarters, recording a dismal growth rate of 2% and 13% respectively. Non lending NBFCs who are predominantly engaged in the capital market are further forecasted to see an increase of 39% in earnings as driven by brokers and exchanges.

 

The construction materials sector is likely to be under pressure due to weak realisations while consumer staples will be affected by slowing urban demand. The metals mining oil gas and consumable fuels sectors are projected to report weak or single-digit net income growth. On the other hand sectors such as capital goods diversified financials pharmaceuticals real estate and telecommunications are expected to deliver strong YoY net income growth. Capital goods will benefit from healthy demand pharmaceuticals from stable US generics pricing and growth in other markets real estate from improved launch activity and telecommunications from higher average revenue per user (ARPU). Kotak Institutional Equities expects Q3FY25 net profits for the BSE-30 index to increase by 7.2% YoY and for the Nifty-50 Index to grow by 9% YoY and 2.2% QoQ. Motilal Oswal Securities forecasts the MOFSL Universe and Nifty-50 earnings to grow by 6% YoY each in Q3. Brokerage firm Nuvama anticipates a slight improvement from 6% growth in Q2FY25. This would mark the seventh consecutive quarter of sub-10% top-line growth. Further EBITDA margin growth for Nuvama’s coverage (excluding commodities and BFSI) is expected to be stable YoY (compared to a significant expansion in FY24) which is weighing on PAT growth. Nuvama estimates PAT growth of 9% (up from 6% in Q2FY25) a significant slowdown from the 20%-plus growth in FY24. On a YoY basis profits are expected to be weak for commodities cement consumer goods and pharmaceuticals while industrials banks and chemicals are likely to experience acceleration. Brokerages also expect EBITDA margins for listed firms to remain flat YoY at 17.1% supported by healthcare and telecom but weighed down by commodities and cement. Meanwhile Nifty-50 EBITDA margin is expected to expand by 30 basis points reaching 20.2%. Motilal Oswal Securities expects modest earnings growth primarily driven by the BFSI sector with positive contributions from technology capital goods healthcare and real estate. Earnings for PSU Banks NBFC-Lending and Private Banks are expected to grow by 13% 8% and 2% YoY respectively. However the 2% growth in private and 13% growth in PSU banks represents the lowest earnings growth in the last 13 and 10 quarters respectively. Non-lending NBFCs (capital market players) are expected to see a 39% YoY earnings increase driven primarily by exchanges and brokers it added.