Q1 Earnings Scorecard Strong Demand Drives Revenue Input Costs Hit Profits

ET Intelligence Group: A double-digit increase in revenue but lower profitability due to input cost pressure were the key highlights of the June 2026 quarter across sectors. Consumer focussed sectors including automobiles and consumer goods reported strong top line growth led by sustained demand while sectors including cement, pharmaceuticals and downstream oil companies posted lower profitability.AutomobilesHits: Maruti Suzuki's market share increased by 230 basis points year-on-year to 41.2%, aided by a double digit increase in volumes of mall cars and SUVs amid GST rationalisation. Bajaj Auto reported record export volume of 7.3 lakh units, up 54% YoY.Misses: Higher input costs put pressure on sector's aggregate margin, which shrank by 210 basis points to 14.4%. Mahindra and Mahindra's operating margin before depreciation and amortization (Ebitda margin) contracted by 210 basis points to 12.2%.Outlook: Adverse commodity prices, rising competition and likely slack in rural demand in the case of a deficient monsoon are major risks for the sector in the short term. Companies with new product launches in the pipeline stand to gain volume share.Revenue change (YoY): 31.6%Net profit change (YoY): 5.9%BankingHits: Asset quality continued to improve. State bank of India reported its lowest gross nonperforming asset (GNPA) ratio of 1.5% in any of the quarters in over two decades and a record quarterly net profit of ₹21,121.2 crore. The retail, agriculture and micro, small and medium enterprises (MSME) portfolio of banks continued to show double digit YoY growth.Misses: Profitability remained under pressure for most banks as net interest margins (NIM) either contracted or remained flat sequentially and year-on-year.Outlook: Credit growth is likely to moderate in the coming quarters on a higher base in the previous year and sustained geopolitical uncertainties. On the liabilities front, attracting deposits may remain competitive for most banks thereby limiting improvement in NIMs.Revenue change (YoY): 7.0%Net profit change (YoY):25.1%Read more: Indian equities could hit new highs next year: Aditya Birla MFCementHits: Cement prices firmed up 3% sequentially in the June quarter. Ultratech Cement delivered its strongest-ever first quarter in terms of volume, revenue, Ebitda and profit. Cement makers protected profitability through cost optimisation amid rising transportation and packaging costs.Misses: Barring Ultratech and Shree Cement, which reported double-digit revenue growth, other top companies including Ambuja Cements and ACC posted around 8% drop in their respective top lines amid lower volume.Outlook: The September quarter will likely show muted volume growth given slower construction activities due to rainy season. Given the continued input cost inflation, companies will be prompted to rely more on cost control to protect margins.Revenue change (YoY): 7.6%Net profit change (YoY): -5.3%CONSUMERHits: Volume recovery was a major theme in the June quarter with companies reporting growth across categories. HUL reported 13-quarter strong underlying sales growth driven by 5% volume growth. Nestle reported 24.2% Ebitda margin, the highest June quarter margin in at least four years. Quick commerce remained a major area ofexpansion.Misses: Higher transportation and packaging costs dented profitability on a sequential basis.Outlook: Input cost inflation in categories including edible oil, dairy products, sugar and cocoa is expected to affect profitability. It may prompt companies to undertake another round of price increases across products to defend margins.Revenue change (YoY): 9.5%Net profit change (YoY): 0.8%ITHits: Order bookings remained buoyant during the June quarter despite delays in decision making by clients. Tech Mahindra reported 2.2% sequential growth in dollar denominated revenue, the strongest among top IT companies.Misses: HCL Technologies and Wipro reported sequential squeeze in dollar revenue amid delays in project ramp ups.Outlook: Process efficiency through artificial intelligence (AI) related routes is expected to compress the revenue growth rates of IT exporters in the medium term. Adoption of AI tools and methods through collaborations will be crucial for Indian IT companies to stay relevant.Revenue change (YoY):15.9%Net change (YoY):11.9%OIL AND GASHits: Oil producers reported strong numbers helped by higher crude oil prices. ONGC and Oil India reported multi-fold jump in their respective standalone net profits. Oil marketing companies (OMC) reported strong demand. Indian Oil posted record quarterly revenue of Rs 2.8 lakh crore.Misses: Under-recoveries for OMCs shot up in the June quarter denting profitability. Staterun OMCs reported net losses for the quarter.Outlook: A higher volatility in crude oil prices reduces revenue and profit visibility for the sector. At the prevalent crude oil prices, upstream companies would be able to sustain their profits and profitability. Lack of meaningful increase in product prices will affect performance of OMCs.Revenue change (YoY): 32.6%Net profit change (YoY):-57.2%PHARMAHits: Domestic and specialty sales remained buoyant. Sun pharma’s domestic sales grew 16% YoY, faster than the overall revenue growth of 10%.Misses: Ebitda margin of Dr Reddy’s contracted sharply to 10.6% from 25.3% a year ago following price erosion in the US generics market. Cipla’s margin fell by around 900 basis points to 16.7% due to cost inflation, inventory write-offs and investments in product development.Outlook: Specialty and innovative products are emerging as major growth drivers amid slowing sales of generics in the US market. Segments including peptides and respiratory drugs are likely to generate growth traction.Revenue change (YoY): 15.8%Net change (YoY):15.9%