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Winners and losers of Q2FY25: BFSI and pharma lead, while oil & gas struggles

Upstox
By Upstox News Desk

5 min read | Updated on November 23, 2024, 09:11 IST

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SUMMARY

In Q2FY25, BFSI and pharma sectors posted double-digit profit growth, and infrastructure performed well, while oil & gas and cement struggled with profitability. Automotive saw divergent trends.

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BFSI and pharma sectors thrived in the September quarter, while consumer goods and oil & gas sectors faced challenges

BFSI and pharma sectors thrived in the September quarter, while consumer goods and oil & gas sectors faced challenges

The second quarter of FY25 showcased a mixed bag of performances across Indian industries. While specific sectors accelerated with double-digit growth, others faced headwinds due to macroeconomic challenges, rising costs, and fluctuating demand. This comprehensive analysis takes you through the highlights, sector by sector.

Note that all the figures are compared with the same quarter of the previous year (Q2FY25 vs. Q2FY24).

Automotive

The automotive sector showed a dichotomy in performance, with two- and three-wheelers leading the charge in volume growth. However, passenger vehicles (PVs) and commercial vehicles (CVs) faced a slowdown, with volumes declining by 2% and 11%, respectively.

Despite these challenges, companies like Mahindra & Mahindra managed to shine, with revenue growth of 9.9% and a 35.3% surge in net profit. Maruti Suzuki saw a revenue growth of 0.1% and a decline in profit by 18.1%. Bajaj Auto posted revenue growth of 21.1%, whereas net profit declined by 31.4%. On the other hand, Tata Motors struggled with a 3.7% revenue decline and an 11.2% dip in net profit. Export markets in regions like Africa and Bangladesh remained weak, adding to the sector’s woes.

Looking ahead, a gradual revival in PV demand is expected by FY26, offering hope for long-term recovery.

IT Software

India's IT sector remained steady, posting moderate growth in Q2FY25. The depreciation of the rupee and improved utilization rates helped companies expand margins. Midcap IT firms outperformed their larger peers, continuing to narrow the valuation gap.

While TCS delivered modest revenue growth of 7.7% and a 5.0% increase in net profit, Tech Mahindra impressed with a 153.1% spike in profits despite subdued revenue growth of 3.5%. Infosys reported a 5.1% revenue growth with a 4.7% rise in net profit. HCL Tech posted revenue growth of 8.2% and a 10.5% rise in net profit. The industry anticipates temporary challenges in Q3 due to furloughs, but signs of client reinvestments point to a positive long-term trajectory.

Pharma & Healthcare

The pharma and healthcare sectors were among the strongest performers, buoyed by double-digit revenue growth. Companies benefited from a robust US market, with increased niche launches and a favourable product mix.

Sun Pharma reported a 10.5% increase in revenue and a 28% rise in net profit, while Apollo Hospitals posted a remarkable 62.6% jump in profits, driven by higher patient volumes and improved revenue per bed. Cipla reported a 5.6% rise in revenue and a 15.2% increase in net profit. Aurobindo Pharma reported a 6.9% rise in revenue with an 8% rise in net profit.

The sector's steady growth trajectory continues to be supported by innovation and strong demand for chronic therapies.

Banking & Financial Services (BFSI)

The BFSI sector emerged as a top performer, driven by double-digit growth in gross interest income and net profits.

HDFC Bank reported a 10% rise in net interest income, and net profit rose by 5.3%. SBI saw a rise of 5.4% in net interest income and a 27.9% increase in net profit. Axis Bank saw a 9.5% rise in net interest income and an 18% rise in net profit.

However, a rise in bad loans and higher provisions posed challenges. Non-banking financial companies (NBFCs) also saw revenue growth but struggled to convert it into substantial profit gains. For instance, Bajaj Finance achieved a 27.7% revenue increase, but net profit grew by only 12.6%.

Consumer & Retail

The consumer and retail sectors faced muted demand, particularly in urban areas, due to inflation and adverse weather conditions. Rural markets, however, continued to outperform.

Outliers like ITC managed to grow revenues by 16.7%, while FMCG giant Asian Paints faced a 5.3% revenue drop and a 42.4% decline in profits. Despite rising costs, cost-control measures helped companies contain margin erosion. Companies that missed the estimates included Colgate-Palmolive, Britannia, Nestlé, and Dabur.

Infrastructure & Power

The infrastructure and power sectors delivered strong results, benefiting from lower raw material costs and higher non-core income. Construction companies outpaced expectations, with net profit growing 34.1% year-on-year.

Larsen & Toubro recorded a 20.6% rise in revenue, while NTPC managed a 14.3% net profit growth despite marginal revenue declines. Tata Power reported a marginal revenue decline with a 5.8% rise in net profit. ABB India reported a 5% rise in revenue and a 21.4% rise in net profit.

With a pipeline of government projects, these sectors are poised for continued growth.

Metals & Cement

The metals and cement sectors faced contrasting realities in Q2FY25. While metals saw an 18% increase in net profit due to better margins, cement companies endured their worst quarter in five years, with profits declining 75% year-on-year.

JSW Steel's revenue declined by 10.8%, and net profit dropped by 85.4%. Hindalco Industries saw revenue growth of 7.4%, whereas profit grew by 78%. UltraTech Cement's revenue declined by 2.4%, while net profit rose by 36%.

Oil & Gas

Oil and gas companies struggled in Q2FY25, with a sharp 41.1% decline in combined net profits. Lower oil prices and declining refining margins hurt both public and private players.

Reliance Industries, despite steady revenue, saw its net profit decline by 4.8%, while public-sector majors like Indian Oil Corp reported significant losses. Bharat Petroleum reported a 72% decline in net profit.

Key Takeaways from Q2FY25

The second quarter of FY25 was a mixed bag, highlighting resilience in sectors like pharma, BFSI, and infrastructure, while others such as automotive, metals, and oil & gas faced significant challenges.

Winners: BFSI, pharma, and infrastructure emerged as clear winners, posting double-digit profit growth.
Stragglers: Oil & gas, cement, and consumer goods struggled with profitability due to rising costs and muted demand.
Outlook: The festive season and government spending are expected to boost growth in H2FY25, but inflationary pressures and global economic trends remain key risks.

About The Author

Upstox
Upstox News Desk is a team of journalists who passionately cover stock markets, economy, commodities, latest business trends, and personal finance.

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