Corporate earnings show mixed results in Q3 FY25; RIL, TCS buck the trend

Despite some promising financial numbers from India’s leading corporates, early data for the October-December 2024 quarter reveals a familiar trend: declining overall income and profits. According to CMIE data, companies in the non-financial sector have seen total income drop for the third consecutive quarter, extending a slump that began in December 2023.

While the sample size of reporting companies in Q3 FY25 is small at just 129, the downward trajectory in corporate earnings remains clear. These companies reported total income of ₹3,49,337 crore, marking a 0.47% decline quarter-on-quarter (QoQ). For comparison, the preceding July-September quarter saw 3,396 non-financial companies report a cumulative income of ₹25,08,717 crore, reflecting a marginal decline of 0.05%.

Interestingly, net profit among the 129 listed companies that have declared their Q3 FY25 results so far has grown 8.77% QoQ, reaching ₹43,125 crore. This uptick, however, is largely driven by strong performances from corporate giants like Reliance Industries (RIL), Tata Consultancy Services (TCS), and Infosys. In contrast, the previous quarter saw an overall net profit decline of 1.15% at ₹1,99,121 crore, following positive growth of 1.63% in Q1 FY25.

On the expense front, the pattern of decline persists. Total expenses among the 129 companies decreased by 4.05% QoQ to ₹3,12,062 crore. In the July-September quarter, expenses for 3,396 companies stood at ₹23,32,451 crore, reflecting smaller declines of 0.11% and 0.23% in prior quarters.

While the broader picture for Q3 FY25 earnings is discouraging, some corporate results offer optimism. Reliance Industries, led by Mukesh Ambani, posted a 7.7% year-on-year (YoY) growth in consolidated revenue at ₹2,67,186 crore, driven by robust growth in digital services and retail. Its consolidated profit after tax (PAT) surged 7% YoY to ₹18,540 crore. On a QoQ basis, RIL also improved, with Q3 FY25 profit and revenue surpassing Q2 FY25’s ₹17,394 crore and ₹2.32 lakh crore, respectively.

Similarly, TCS reported a consolidated net profit of ₹12,380 crore in Q3 FY25, while revenue stood at ₹63,973 crore, supported by growth in the consumer business group (1.1%), energy, resources, and utilities (3.4%), and regional markets (40.9%). Though revenue dipped slightly from ₹64,249 crore in Q2 FY25, profits rose from ₹11,909 crore in the previous quarter.

Infosys also showed strength, with net profit rising 4.6% QoQ to ₹6,806 crore in Q3 FY25 and revenue growing 1.8% to ₹41,764 crore. Meanwhile, Axis Bank’s Q3 FY25 profit declined marginally to ₹6,763.10 crore from ₹6,917.57 crore in Q2 FY25, while net interest income (NII) rose slightly to ₹13,606 crore. Despite some positive results from industry leaders, the question remains whether corporate earnings can reverse the broader trend of decline in the final months of FY25.