The RBI's monetary policy review meeting, scheduled for December 4-6, comes at a time when markets have turned volatile, with foreign fund outflows, sticky food inflation, and global uncertainty. India's GDP growth number for Q2FY25 also landed with a thud, slowing to 5.4% in Q2FY25, far below estimates and the lowest in two years.
Gaura Sen, chief economist at IDFC Bank, lowered India’s overall FY25 GDP growth forecast to 6.3% from 6.6%. She noted that much of the weakness in the first half has come from, “a slowdown in urban demand and decline in government capital expenditure.” Brokerages like Nomura and ICICI Securities also lowered their FY25 GDP growth estimates. While Nomura and HSBC expect a rate cut in December from the RBI, consensus still remains that RBI might start rate cuts only in February 2025.
Indian Inc’s results season was pretty muted, with many companies missing earnings expectations. This triggered an equity selloff. JM Financial analyzed 227 companies under its coverage and found that 45% missed earnings estimates, highlighting a challenging quarter.
In this week's Chart of the Week, we explore the Trendlyne's Results Dashboard to analyze which industries excelled and which ones underperformed.
Exchanges & capital markets firms continue to outperform in Q2FY25
India’s capital markets have steadily grown in recent years, with the trend continuing in the last quarter. Despite the recent volatility, markets hit new highs, with Nifty50 near its all-time high of 26,179 after rising 20.5% over the past year. As per Trendlyne's Results Dashboard, the exchange industry reported a remarkable 94.8% YoY revenue growth in Q2FY25, with operating profit margins soaring 71.3% in the same period due to increased activity in the equity derivatives segment and higher daily premium turnover.
BSE posted a threefold jump in net profit, reaching Rs 346.8 crore for the September quarter. The average daily premium turnover in the equity derivatives segment soared to Rs 8,203 crore in Q2FY25, compared to Rs 768 crore in the same quarter last year. Similarly, MCX India's revenue jumped 68.8% YoY, rising to Rs 310.8 crore.
The capital markets industry saw overall revenue and operating profit margin growth of 44.7% and 12% respectively, in Q2. Firms like Motilal Oswal Financial Services, ICICI Securities and Angel One contributed to this surge.
Consumer electronics see growth, realty sector shows mixed performance
The consumer electronics industry saw average revenue growth of 61.3% YoY, while net profit jumped 170.7%. Once considered a luxury, room air-conditioners (AC) have become popular as summers have become hotter. AC manufacturers like Voltas and Blue Star reported net profit growth of 265.3% and 36.1% respectively in Q2FY25, driven by high demand. The operating profit margin for Voltas surged by nearly 102% and by 1.1% for Blue Star as it is significantly increasing its production and capacity to prepare better for the upcoming summer.
Voltas' unitary cooling products segment, which includes split and window AC, maintained strong growth momentum. The segment outperformed the market with a 56% surge in volumes. The company retained its leadership position in the AC segment, achieving a 21% market share as of September 2024. The AC segment revenue rose by an impressive 45% to Rs 5,384 crores, compared to Rs 3,723 crores in the same period last year.
Another consumer electronics front-runner, Dixon Technologies posted better-than-expected Q2FY25 results. This was led by a 235% YoY revenue increase in the mobile segment. Acquisition of Ismartu in August 2024, boosted mobile production and volumes from brands like Itel, Infinix, and Tecno. The company’s net profit jumped by nearly 263% to Rs 390 crore in Q2 from Rs 107.3 crore last year. Operating profit margin also increased marginally. The company’s booming mobile phone manufacturing segment contributed 73% to the operating profit and 82% to the total revenue.
Meanwhile, the realty industry had a mixed performance in Q2FY25, with both winners and losers. Average revenue growth stood at 26.3%, with operating profit margins rising by 68.3%. Companies like Godrej Properties, Sobha, and DLF played a key role, growing due to new project launches and higher retail demand in Q2. However, the sector's net profit fell by 17.7% in the September quarter. Prestige Estates reported a 77.4% drop due to a Rs 106 crore deferred tax impact, mainly from tax code changes, including the removal of indexation benefits on capital gains.
Gems & jewellery industry report strong growth, while movies & entertainment faces a decline
The gems & jewellery industry witnessed a 54.8% revenue growth and 76% operating profit margin growth, on average. In the spotlight was industry leader Titan, which reported a 15.8% increase in revenue, but its net profit dropped by 23% due to a reduction in customs duty. The customs duty cut led to lower gold prices, boosting jewellery sales. However, increased costs and reduced margins affected net earnings. The company saw its standalone jewellery business revenue grow 26% to Rs 10,763 crore compared to the same quarter last year. Meanwhile, Kalyan Jewellers saw a nearly 37.6% surge in revenue, though its operating profit margin fell by around 24% due to the fluctuating gold prices. Senco Gold also contributed to the overall industry growth with positive revenue, net profit and operating margin growth in Q2FY25.
The movies and entertainment industry experienced a 13.4% drop in revenue. India’s largest multiplex chain, PVR Inox, reported its third consecutive quarterly loss as the growing popularity of streaming services kept audiences at home, impacting box-office collections and food and beverage sales.
Movie theaters have been struggling with low footfalls in recent quarters as higher inflation has led consumers to cut back on discretionary spending. In response, multiplexes have introduced lower-priced weekday passes and reduced popcorn prices to attract customers.
Cement industry and roads & highways witness revenue moderation in Q2FY25
Both cement and roads & highways industries reported a decline in revenue growth YoY in Q2. The cement industry’s average revenue and net profit growth declined by 1.4% and 75.4%, respectively in Q2. This was due to weak demand during the monsoon season. UltraTech Cement, the market leader, saw its first quarterly revenue drop in four years, with a 2% and 19% decline in revenue and operating profit margin, respectively. Grasim Industries also saw a 66.5% decline in net profit and a 22.3% reduction in its operating profit margin.
Similarly, the roads and highways industry's average revenue declined by 11.7% during Q2, but operating profit margins edged up by 0.8%. IRB Infrastructure reported a 6% decline in revenue growth for the quarter, while operating profit margins increased by 6%. Virendra Mhaiskar, Chairman and MD of IRB Infrastructure said, “We anticipate better performance in the upcoming quarters, driven by the end of the monsoon season, the onset of the festive season, and accelerated progress in under-construction projects."
