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Indian companies across multiple sectors have reported disappointing results in the second quarter of fiscal year 2025, notes a new JM Financials report. Consequently, their poor performance has triggered stock price corrections for affected companies. The brunt of this weaker than expected earnings was largely borne by consumer centric sectors like FMCG (fast moving consumer goods), retail, and auto, which slacked largely due to dampened urban demand. For instance, India's largest automaker, Maruti Suzuki, reported a 5% YoY decline in its total domestic passenger vehicle wholesales, largely on the back of pent-up inventory. Similarly, Honda reported a staggering 23% YoY dip in its total sales during October 2024. A recent report by Bernstein noted that around 48% of the companies listed on the NSE100 index missed their earnings estimate for Q2FY25, the highest since March 2020. Most companies have mentioned deteriorated domestic demand, urban slowing, macroeconomic risk, and margin pressures as the main reasons behind the dip. "The quarter's earnings have made investors nervous," noted the JM Financials report. The challenging environment stems from multiple factors: softening consumer demand, rising input costs, and companies' limited ability to increase prices. Moreover, this is not limited to just one quarter. Companies have been reporting weak, single-digit earnings growth for the last six consecutive quarters. Data from India Data Hub also suggests that corporate profits of listed companies plunged by as much as 3.4% during the quarter ended September 30, 2024. This is in stark contrast to the year-ago period, where they had shot up by over 40% The oil and gas sector had a difficult quarter, with refiners hit by weak margins and city gas distributors struggling with higher input costs. Financial institutions showed mixed results. While government-owned banks reported strong numbers, microfinance institutions and some private lenders faced massive difficulties with their unsecured loans. Most notable amongst this was the case of IndusInd Bank, which saw its net profits dip by 40% amidst burgeoning provisions, which climbed 87% to Rs 1,820 crore in Q2, as against Rs 974 crore reported in the year-ago period. <h2>Markets head southwards</h2>The selling trend by FPIs has dragged down the major Indian indices, the Nifty 50 and Sensex, both of which have dropped by around 8% since the beginning of this selling spree in October. According to National Securities Depository Ltd. (NSDL) data, FPIs offloaded equities worth a significant Rs 19,994 crore in just the first five trading sessions of November last week. The impact is clearly visible on Indian stock markets. Data suggests that while every sector in October closed the month in red, auto, oil and gas, and consumer durables were the most badly hit, each declining by as much as 10% during the month. Another indicator underlining the inherent weakness of the market was that the month saw only 242 stocks hit their 52-week high, significantly below the usual monthly average of 310.

India Inc. stares at an earnings dearth in Q2, FMCG, auto, and consumer durables falter

Coal India Limited (<keyword id="19983407" type="General" weightage="20" keywordseo="CIL" source="keywords">CIL</keyword>) achieved an 8 per cent <keyword id="19910261" type="General" weightage="20" keywordseo="growth" source="keywords">growth</keyword> in <keyword id="19922489" type="General" weightage="20" keywordseo="coal-production" source="keywords">coal production</keyword>, reaching 189.3 million <keyword id="22246379" type="General" weightage="20" keywordseo="tonnes" source="keywords">tonnes</keyword> in the first quarter of the current fiscal, surpassing its target of 189.2 million tonnes, the company said in a statement on Monday. The company's production increased by 13.8 million tonnes compared to the corresponding quarter of FY'24, with all seven producing subsidiaries registering positive growth, it said. CIL's supplies also rose by 6 per cent to 198.4 million tonnes during April-June 2024, with a significant increase in supplies to both power and non-power sectors, it added. The company's coal loading witnessed healthy growth, with an average of 367.2 rakes per day, a 10.3 per cent year-on-year increase, it said. Higher production and loading resulted in a substantial increase in coal inventory at CIL's pitheads, reaching 81.5 million tonnes, providing a sufficient buffer to meet any sudden surge in demand, it said. At a time when power demand in the country is surging, the miner stepped up its supplies to coal-fired plants, registering a 4 per cent growth to 160 million tonnes in <keyword id="20501879" type="General" weightage="20" keywordseo="Q1" source="keywords">Q1</keyword> FY'25, a year-on-year increase of 6 million tonnes. In the same period of FY 2024, CIL's off-take to thermal power plants stood at 154 million tonnes, the company said. Additionally, CIL's supplies to the non-power sector reached an all-time high of 38.4 million tonnes in Q1FY25, logging a 16 per cent growth. This sector had received 33 million tonnes in April-June 2023. The growth in June 2024 alone was 23 per cent at 13.4 million tonnes, the statement said. SEE ALSO:<a href="https://www.businessinsider.in/stock-market/news/vraj-iron-and-steel-ipo-allotment-how-to-check-allotment-ipo-gmp-listing-date-and-more/articleshow/111394752.cms" target="_blank"></a> <a href="https://www.businessinsider.in/stock-market/news/vraj-iron-and-steel-ipo-allotment-how-to-check-allotment-ipo-gmp-listing-date-and-more/articleshow/111394752.cms" target="_blank">Vraj Iron and Steel IPO allotment – How to check allotment, IPO GMP, listing date and more</a><a href="https://www.businessinsider.in/business/telecom/news/reliance-jio-and-airtel-price-hike-new-plans-and-how-you-can-save-money/articleshow/111331794.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/telecom/news/reliance-jio-and-airtel-price-hike-new-plans-and-how-you-can-save-money/articleshow/111331794.cms" target="_blank">Reliance Jio and Airtel price hike – new plans and how you can save money</a><a href="https://www.businessinsider.in/tech/mobile/webstories/upcoming-smartphones-launching-in-india-in-july-2024/slidelist/111304902.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/mobile/webstories/upcoming-smartphones-launching-in-india-in-july-2024/slidelist/111304902.cms" target="_blank">Upcoming smartphones launching in India in July 2024</a>

Coal India's Q1 production surges 8% to 189.3 million tonne in FY'25

Public sector mortgage lender, <keyword id="6359231" type="General" weightage="100" keywordseo="Central-Bank-of-India" source="Orion">Central Bank of India</keyword> closed the third quarter of FY24 with higher net profit of Rs.717.86 crore. In a regulatory filing on Friday, the bank said that for the quarter ended December 31, 2023, it had earned a total interest income of Rs 7,809.21 crore (Q3FY23 Rs 6,716.55 crore) and a net profit of Rs 717.86 crore (Rs 458.22 crore). The profit went up drastically owing to the sharp spike in the bank's other income for the quarter under review at Rs 1,329.72 crore (Rs 919.16 crore). During the quarter under review, the bank's provisions for non-performing assets came down to Rs 726.69 crore (Rs 849.62 crore). As on December 31, 2023, the bank's gross and net non-performing assets stood at Rs 10,786.49l crore (December 31, 2023 Rs 18,489.97 crore) and Rs. 2,955,57 crore (Rs 4,060.92 crore). According to the Central Bank of India, during the quarter under review, its total business by 11.48% to Rs. 6,17,368 crore with total deposits growing by 9.53% to Rs 377,722 crore and gross advances going up by 14.71% to Rs 239,646 crore. Net Interest Income (NII) marginally declined by 4.04% on Y-o-Y basis to Rs 3,152 crore in Q3FY24 as against Rs 3,285 crore for Q3FY23. However excluding one off exceptional item, NII was up 3.73% from Rs 3,042 crore in Q3FY23 to Rs 3,125 crore in Q3FY24.

Central Bank of India logs Rs.717 crore net profit for Q3

India's largest airline with a market share of 62.5% and Asia's biggest carrier by market valuation, <keyword id="19899182" type="General" weightage="100" keywordseo="IndiGo" source="keywords" meta.keywordsubtype="org" meta.entityname="IndiGo" meta.hostid="261" meta.entityid="IndiGo">Indigo</keyword>, posted a net loss of Rs 986.7 crore for the last quarter ended September 30, 2024. Indigo's profits during this quarter in 2023 were Rs 188.9 crore. The main reason behind the carrier running into reds during the second quarter of FY25 was high <keyword id="21353061" type="General" weightage="20" keywordseo="fuel-costs" source="keywords">fuel costs</keyword>. Per the airline, its fuel costs jumped by 12.8% to Rs 6,605.2 crore, compared to Rs 5,856 crore in the year-ago period. Another expense area that witnessed an exponential surge was aircraft and engine rentals, which rose to Rs 763.6 crore in the second quarter. This stood at Rs 195.6 crore in the year-ago period. All in all, the company's total expenses burgeoned 22% to Rs 18,666.1 crore during the previous quarter. Indigo's <keyword id="20066400" type="General" weightage="20" keywordseo="revenue-from-operations" source="keywords">revenue from operations</keyword>, while down by 13.3% on a QoQ basis, from Rs 19,571 crore in June 2024 to Rs 16,970 crore as of September 2023, jumped 13.6% on a YoY basis. The company's revenue from operations during the September quarter in 2023 stood at Rs 14,944 crore. Indigo’s consolidated top line also jumped 14% YoY to Rs 16,970 crore, which included Rs 14,359 crore of <keyword id="23687772" type="General" weightage="20" keywordseo="ticketing-revenue" source="keywords">ticketing revenue</keyword> and Rs 1,875 crore earned from ancillary services. At the end of September 2024, Indigo had a fleet of 410 planes. For the last quarter, Indigo was plagued by mass groundings of its aircraft due to faulty engines manufactured by <keyword id="21405019" type="General" weightage="20" keywordseo="Pratt-and-Whitney" source="keywords">Pratt and Whitney</keyword> Group. This had forced the airline to ground around 75 planes, or about 1/5th of its fleet. However, in the earnings call today, the management noted that the worst was behind them. Indigo expects the number of non-operational planes to drop below 60 by the end of this year and further dip to 40 by March 2025. Already, the number of grounded aircraft had come down to the high 60s. IndiGo’s cost per available seat kilometer (<keyword id="23687771" type="General" weightage="20" keywordseo="CASK" source="keywords">CASK</keyword>)—a useful metric to assess an airline's operational efficiency—also inched up 12% YoY to stand at Rs 4.69. The company expects this figure to inch up to double digits by the next quarter. Indigo's stock was down by 3.23% during the day, closing the week at Rs 4,373.70.

IndiGo's bottom-line turns red for Q2, high fuel costs, and forced groundings main reason

<ul><li><keyword id="67286" type="General" weightage="20" keywordseo="food-inflation" source="Orion">Food inflation</keyword> is expected to be elevated due to the heat wave’s impact on cereal and pulse prices.</li><li>Analysts mostly see shallow <keyword id="6752353" type="General" weightage="20" keywordseo="rate-cuts" source="Orion">rate cuts</keyword> that might come in the third quarter of FY25, as the inflation picture emerges.</li><li>The Indian economy’s Goldilocks moment is continuing and might weigh on GDP growth projections of FY25 at 7%. </li></ul>The ongoing heatwave conditions, and projections of a harsher summer, are likely to impact India’s agricultural output, leading to rising food inflation. This, among others, is expected to weigh heavily on the rate-setting panel or monetary policy committee (MPC) meeting that will start today. “We estimate food inflation to remain elevated above 7.5% in the first half of 2024 on the back of high cereals and pulses (legumes) inflation on the back of an ongoing heatwave in the country. Altogether, we estimate headline (retail) inflation to remain above 5% in 1H 2024,” says a report by Goldman Sachs. Core inflation, however, has been easing, and LPG price cuts are also expected to add to the disinflation process, albeit modestly. Most analysts expect inflation to average around 4.5% for FY25 — and cool after a spike in September. ‘Slightly soften hawkish forward guidance’ The Reserve Bank of India (<keyword id="30067" type="General" weightage="20" keywordseo="rbi" source="Orion">RBI</keyword>) which intends to maintain retail inflation at around 4%, might go for possible interest rate cuts only in the third quarter of FY25, surmise analysts. “We believe the stance should continue to be withdrawal of accommodation. RBI might cut rates only in the third quarter of FY25, such rate cut cycle is likely to be shallow,” said a report by SBI Research. In the meantime, there is ample room for the central bank to hold rates. "We do not expect any change in the policy rate, but a probable explicit or implicit change in stance cannot be ruled out. RBI may acknowledge that core inflation is trending down,” Parijat Agrawal, head – fixed income at Union Mutual Fund, said on the April policy. Apart from softening core inflation, easing liquidity conditions are also expected to provide comfort to the central bank. Thanks to active interventions by the RBI, government spending over the last month has softened inter-bank rates and short-term borrowing rates for bank and non-bank entities. “Liquidity conditions have eased in the past few weeks, with ongoing balance of payments surpluses and pre-election spending likely to keep liquidity conditions in check,” says a report by Barclays. Goldman forecasts one 25 basis-point cut each in Q3 and Q4 of 2024. “We expect the RBI to take comfort from declining core inflation, slightly soften its hawkish forward guidance, but remain cautious given upside risks to food inflation from weather shocks, and repricing of the Fed funds rate easing path,” it added. Signs of slack in the economy The central bank ‘upgraded’ its GDP growth rate expectation for FY24 to 7.3%. It also expects FY25’s growth rate to average at 7%. The market is keenly looking forward to RBI’s commentary on growth projections. As of now, there has been a mixed growth picture. Every economic indicator comes with a rider attached, which Barclays calls ‘signs of slack’ in the economy. For example, the current account deficit (CAD) narrowed to 1.2% of GDP in Q3 FY24, from 1.3% in the previous quarter. While manageable CAD is good news, it also expands during high periods of growth. The government also projected its fiscal deficit to fall to 5.1% in FY25 as compared to 5.8% in FY24. These targets are to be achieved by moderation in government capex and lowering of expenditure. “The latter implies limited direct support to consumption demand from the budget, which, while positive for inflation, also means the fiscal impulse on growth has moderated compared with earlier years,” says Barclays. Economic indicators are also mixed. While cargo traffic, air passenger numbers, and toll collection are falling, vehicle sales are seeing double-digit growth in the last quarter of FY24. “High-frequency activity data remains strong, with our proprietary indices tracking a rebound in consumption growth at 7.9% yoy in Jan-March of 2024 (vs 3.5% in December quarter), but slower investment growth at 2.3% yoy (vs. 10.6% YoY in December quarter) as the government has front-loaded capex,” says Goldman Sachs. The Goldilocks moment of the Indian economy is raising expectations that the RBI might take a call based on the same. “Eventually, we think the RBI will have to consider the balance of risks between overtightening (given the 'not-too-hot-nor-too-cold' state of the economy) and maintaining monetary policy conditions for achieving reasonably good real GDP growth of at least 7%,” says Barclays.

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India Inc. stares at an earnings dearth in Q2, FMCG, auto, and consumer durables falter

Ira Alok Puranik

Coal India's Q1 production surges 8% to 189.3 million tonne in FY'25

PTI

Central Bank of India logs Rs.717 crore net profit for Q3

IANS

IndiGo's bottom-line turns red for Q2, high fuel costs, and forced groundings main reason

BI India Bureau

With food inflation looming large, ‘shallow rate’ cuts expected only in Q3 FY25

Katya Naidu

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