Corporate earnings beat expectations in December quarter: Report

December quarter earnings analysis: Corporate earnings for the December quarter have surpassed expectations fuelled by robust performances in key sectors. However, underlying concerns persist regarding the breadth of earnings revisions going ahead, the Mumbai-based brokerage firm Motilal Oswal said in a report.

The latest earnings report indicates an uptick, with aggregate earnings of companies tracked by brokerage firm Motilal Oswal soaring 29 per cent year-on-year, outpacing earlier estimate of 19 per cent.

Domestic cyclicals, particularly in the auto and financial sectors, emerged as primary drivers of growth, alongside solid gains from global cyclical industries such as metals and oil & gas.

Financials, including banking and insurance, recorded 22 per cent year-on-year growth, while the automotive sector witnessed a staggering 60 per cent surge in earnings. Additionally, metal companies like Tata Steel and JSW Steel reported a robust 74 per cent increase in earnings, indicating a broad-based improvement across sectors.

Despite the overall positive sentiment, concerns loom over the technology sector, which witnessed a marginal decline in earnings for the first time in 26 quarters. Softness persisted in key verticals such as BFSI, Consumer, and Communications, reflecting broader challenges faced by the industry.

The mixed performance in the banking sector, characterised by healthy business growth but persistent net interest margin pressure, underscores the need for continued vigilance amid evolving market dynamics. While credit growth was primarily driven by retail lending, challenges remain in maintaining margins, particularly for public sector banks, Motilal Oswal noted.

On the auto front, recovery in two-wheeler sales coupled with stable growth across other segments propelled a 16 per cent annual increase in auto volumes (excluding tractors). However, challenges persist in the consumer sector, where muted revenue growth and competitive pressures continue to weigh on performance, the brokerage said.

Meanwhile, analysts caution that while the current earnings beat is encouraging, the broader trend in earnings revision breadth appears lacklustre. With the margin tailwind expected to recede in the coming quarters and facing a high base effect, a revival in revenue growth will be essential to sustain earnings momentum.