Key Points
Domestic sector profits decline despite revenue stability
High-end consumer segments experiencing demand weakness
BSE500 index growth remains stagnant around 6-8%
The report highlighted that some of the fast-growing domestic sectors of FY24--such as automobiles, consumer services, airlines, industrials, cement, and banks--have slowed down in FY25. On the other hand, sectors like consumer durables, FMCG, chemicals, and power have seen an improvement in revenue, mainly due to a lower base effect.
It said "In 9MFY25, we observed a slowdown in profit in the faster growing segments of FY24... Some fast-growing domestic sectors of FY24 such as autos, consumer services, airlines, industrials, cement and banks, have slowed in FY25".
The report noted that the corporate earnings in India have begun to show signs of a slowdown, particularly in segments that experienced strong growth in the previous financial year.
The report highlights a deceleration in profits across high-end segments such as premium passenger vehicles (PVs), jewellery, and consumer services.
Additionally, sectors that had earlier benefited from margin tailwinds--such as paints and cement--are now facing fading profitability. Private banks have also witnessed a slowdown in earnings growth.
Some industries continue to struggle with weak profit performance. Chemicals, energy, and quick-service restaurants (QSR) remain under pressure, reflecting ongoing challenges in these sectors.
However, there are some positives, with profits stabilizing in the fast-moving consumer goods (FMCG) and information technology (IT) sectors.
Meanwhile, sectors like industrials, electronic manufacturing services (EMS), telecom, public sector unit (PSU) banks, and non-lending financial firms have reported healthy profit growth.
The overall revenue growth of the BSE500 index has remained stagnant in FY25, hovering around 6-8%. However, the composition of growth has changed.
A key concern raised in the report is the broadening demand slowdown. Initially, the slowdown was largely concentrated in export-oriented sectors, but it has now spread to domestic industries as well.
Within domestic consumption, demand is weakening in high-end segments, which is an alarming sign for the economy.
The report highlights the shifting dynamics of corporate earnings in India, signaling caution for investors and businesses amid a broadening economic slowdown.
