Corporate Results Q4 FY25 Show Mixed Sectoral Trends

The sales growth of corporates improved in Q4 FY25. While sales growth saw improvement, an uptick in expenditure led by rising input prices has resulted in a moderation in corporate profitability growth in the quarter. For the full fiscal year FY25, the financial performance of the corporates was affected by a confluence of factors such as escalating geopolitical tensions, commodity price volatility, election related disruptions and mixed outlook on urban demand. A contraction in profitability in H1 FY25 affected full-year performance significantly. 

This report presents an analysis of the corporate performance of listed non-finance companies. Part I of the study looks at the quarterly performance of 1011 companies. Section (A) provides an overview of the aggregate performance of these companies, whereas Section (B) presents a snapshot of the sectoral performance of select 21 sectors (See Annexure 1 for details). Part II of the study provides a snapshot of the annual earnings results of 810 listed non-finance companies. In Part III, we look at the growth in employee costs of various sectors to draw inferences about the consumption demand. 

1. Corporate Performance – Q4 FY25 

Aggregate Analysis 

In Q4 FY25, net sales of non-financial firms continued their recovery, increasing by 7.6% YoY from 7.4% YoY in the previous quarter (Refer Table 1). Despite the improvement in net sales, growth in corporate profitability moderated in the same quarter due to rising expenses. Operating profit growth slowed from 9.7% YoY in Q3 to 8.4% YoY in Q4, while profit after tax (PAT) growth declined from 19.4% YoY in Q3 to 7.6% YoY in Q4. 

The moderation in profitability can largely be attributed to a rise in overall expenditures and a large adverse base from the last year. Total expenditure grew by 7.4% YoY in Q4, compared to 6.9% YoY in Q3. This increase was driven by higher costs across multiple components, including services, raw materials, and employee expenses. Employee costs rose modestly to 7.2% in Q4 from 6.8% in the previous quarter, while the cost of raw materials saw a more pronounced acceleration, recording a growth of 10.5% in Q4 from 6% 

growth in Q3. The acceleration in the cost of raw materials corresponds with the uptick in the global commodity prices in Q4. Bloomberg commodity price index was up by 6.5% YoY in Q4, which contrasts with the contraction of -3.3% YoY in Q3. Even the industrial metal price index has risen 7% YoY in Q4, higher than 6.2% in Q3. 

In terms of financial ratios, the overall operating profit margin for corporations improved marginally to 19.2% in Q4 from 19% in Q3 (Exhibit 2). However, this remains above the profit margin of over 18.7% observed in the first half of FY25. Interest coverage ratio (ICR) continued to improve with the growth in profitability and policy rate cuts by the RBI initiated in February 2025. The ICR in Q4 stood at 8.5 higher than long term average of 8 (since 2019), indicating stronger financial health of firms. 

Sectoral Overview 

We conducted a detailed analysis of the financial performance of 20 select sectors in Q4 FY25 (refer to Annexure I). Of these, nine sectors recorded double-digit growth in both net sales and operating profit, highlighting strong performance. Notable among them are Chemicals, Hospitality, Non-Ferrous Metals, Pharmaceuticals, Retailing, Telecom, and White Goods—all of which sustained robust double-digit growth across both key metrics. In contrast, sectors such as Crude Oil, Iron & Steel, Media & Entertainment, Power, Automobiles & Ancillaries, and Information Technology exhibited muted performance, with subdued growth in both sales and operating profit. 

The telecom sector benefited from the upward revision of tariffs by key service providers. Additionally, the white goods sector, particularly air conditioners and refrigerators, saw increased demand driven by recovering rural consumption and seasonal weather shifts. The pharmaceutical sector performed well, driven by several factors contributing to the growth in the domestic market. The sector saw a notable increase in demand across both acute and chronic segments, and the 4% to 5% price revision allowed under the National Pharmaceutical

Pricing Authority (NPPA) positively impacted revenue growth. Additionally, easing input pricing pressures, the revival of biotech funding, the launch of speciality products, and deeper penetration into the generic market all supported export growth for pharma companies. The hospitality industry is likely to have benefited from the festivities amidst ‘Maha-Kumbh’ celebrations in Q4. However mixed outlook on the urban demand has likely impacted the automotive industry. Passenger vehicle sales in Q4 FY25 grew by 2.3% YoY, lower than 4.5% YoY in Q3. Additionally, two-wheeler sales also slowed to 1.4% YoY in Q4 from 3% YoY in Q3. The iron and steel sector may have been adversely affected in Q4 due to a combination of oversupply from China and heightened trade policy uncertainties, particularly following the imposition of tariffs on auto and steel imports from Mexico and Canada. 

1. Corporate Performance in FY25 

In FY25, non-financial corporates registered a modest improvement in topline performance, with net sales growing by 7.7% YoY, up from 3.7% YoY in the previous year (Refer Table 4). However, profitability came under pressure due to a sharper increase in total expenditure, which rose by 8.1% YoY in FY25, significantly higher than the 1.8% YoY growth recorded in FY24. Within the expenditure components, employee cost growth moderated to 7.2% in FY25 from 10.7% in FY24. Nonetheless, a steep rise in the cost of services and raw materials—up 9.9% in FY25 compared to just 0.8% in the previous year—was a key driver of the overall increase in spending, weighing on corporate profitability. The deceleration in employee cost growth remains a point of concern from a demand perspective, particularly given anecdotal evidence indicating a mixed outlook for urban consumption. A strong recovery in consumption is also imperative for a pickup in private capital expenditure. 

Rising services and raw materials costs have resulted in a sharp moderation in operating profit growth to 6.4% in FY25 from 15.3% in FY24. This decline in operating performance has also translated into weaker bottom line results, with profit after tax (PAT) growth falling to 6.4% in FY25 from 14.5% in the previous year. Overall, the corporate profitability has improved from the lows in H1 FY25, where the performance was hit by election related disruptions. However, the recovery has been modest and needs closer monitoring. 

III. Implications for Urban Demand: Trends in Employee Costs Across Key Non-Financial Sectors Among major non-financial sectors, six—Information Technology (IT), Automobiles & Ancillaries, Infrastructure, Pharmaceuticals, Capital Goods, and Non-Ferrous Metals—collectively account for approximately 80% of the total employee costs of the 669 non-financial firms in the sample. 

In FY25, employee cost growth in three sectors—Infrastructure (growth of 13.7% YoY), Pharmaceuticals (11.2% YoY), and Capital Goods (10.9% YoY)—outpaced nominal GDP growth. In contrast, sectors such as IT (4.9%), Automobiles & Ancillaries (8.8%), and Non-Ferrous Metals (2.5%) recorded salary growth that lagged nominal GDP expansion. Notably, the IT sector alone accounts for ~44% of the total employee costs among these sectors (Refer Table 5). 

The Indian IT industry is the largest employer within the organised sector, directly employing around 5.8 million individuals (as per NASSCOM)—approximately 1.7 times the number of central government employees (~3.5 million). Given its scale and importance, the subdued salary growth in the IT sector raises concerns for overall urban consumption, as it may weigh on household income and spending patterns. The employee cost growth of the IT sector has fallen from the highs of 19% YoY in FY23 (annual average growth of 15% from FY19 -FY23) to 5% in FY25. The FY25 growth also lags the broader trend, with average employee cost growth across all sample sectors standing at 10.7% over the FY19–FY25 period. This is especially critical at a time when there are risks for the sector from advancement of artificial intelligence. 

While lowering of the income tax burden is likely to support the consumption it is imperative for policymakers to monitor the trend and design policy measures that raises household income. This is crucial as the private final consumption expenditure constitutes ~60% of GDP.

Way Forward 

We expect corporate performance to improve going ahead. While rural demand has held up well, supported by robust agricultural production, the outlook for urban demand continues to remain mixed. Prospects of an above normal monsoon have brightened the outlook of rural demand as it will support farm output and lower food inflation. However, it will be crucial to monitor the temporal and spatial distribution of the monsoon. Additionally, the consumption scenario is anticipated to gain due to factors such as lower tax burden, benign inflation and RBI rate cuts. While the overall public capex push is expected to be sustained, a strong recovery in consumption is also imperative for a pickup in private capital expenditure. 

External headwinds—including global policy uncertainty, trade tensions, sluggish global growth, and geopolitical risks—will continue weighing on domestic growth prospects. Even though global commodity prices have eased following concerns about global growth prospects, the recent rise in geopolitical tensions in the Middle East has resulted in a sharp uptick in global energy prices and needs to be monitored closely. 

The overall performance of corporates in the coming quarters will depend upon the unfolding of the global growth scenario and any external risks associated with geopolitical tensions, trade policy uncertainties, commodity price shocks. While lower interest rates will be a supporting factor, domestic demand conditions will play a critical role in overall corporate performance in the coming quarters.