Q4 earnings watch: Consumption giants drive revenue but lag in profits
Summary
In the latest edition of Q4FY25 earnings series, Mint explores the financial health of the consumption-focused market leaders compared to the rest of India Inc.
Consumption-focused companies drove a significant share of revenue growth for India Inc. in the March quarter (Q4), the final leg of fiscal year 2024-25, even as profit growth lagged. In contrast, non-consumption sectors turned in more robust bottomlines, pointing to a shifting dynamic in corporate performance.
This divergence—where consumption-led firms maintained sales momentum but ceded ground on profitability—underscores how rising input costs and tepid urban demand are squeezing margins, even as pricing actions helped protect revenues.
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A Mint analysis of 13 consumption-driven companies from the Nifty India Consumption Index, which includes firms deriving over half their revenue from domestic demand, shows aggregate revenue grew 11.9% year-on-year. While this double-digit growth outpaced the broader India Inc., which posted just 2.9% growth, it was slower than the December quarter's performance.
The analysis, based on standalone data from the Capitaline database, examined the latest quarterly earnings of 439 listed companies that have declared results so far.
Analysts note that price increases have helped sustain volumes, and the trend is expected to continue in the coming quarters. Even so, the data comes against the backdrop of a broader consumption slowdown.
While consumption-led companies managed to maintain their revenue momentum, profitability told a different story. Net profit growth in this cohort slowed to 6.9% in Q4FY25, down sharply from 21.6% in the December quarter. In contrast, the rest of India Inc. posted stronger bottomline growth of 9.5%.
A company-wise breakdown shows that only four of the 13 firms—Adani Power, Maruti Suzuki, Nestle India, and Trent—reported a decline in net profits, pulling down the segment’s overall earnings performance.
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A detailed company-wise performance of all consumption-led companies revealed that only four of the 13 companies reported a decline in their bottom line numbers that slowed the samples' overall net profit growth. These included Adani Power, Maruti Suzuki, Nestle India, and Trent.
Among these underperformers, Adani Power faced particular challenges. After managing to record some profit growth in the December quarter, the company experienced a profit contraction in the March quarter. Nevertheless, this contraction was significantly less severe than what the company witnessed during the first half of the fiscal year.
The Adani Group's energy subsidiary also recorded negative revenue growth in Q4, in-line with the trend of double-digit revenue contraction observed in the first half of the fiscal year.
Tata Group-owned retailer, Trent, also reported its first profit contraction in the March quarter, following robust profit performance in the first three quarters of the fiscal year.
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Meanwhile, large-cap staples like Hindustan Unilever and Avenue Supermarts posted muted profit growth of 3-4%. On the brighter side, the remaining seven firms delivered strong double-digit earnings growth, led by Tata Consumer Products.
This is the eighth part of a series of data stories about the ongoing Q4 earnings season. Read previous parts of our earnings series here.
