The second quarter results of FY24 ended creditably, a bit better than expectations with sectors such as automobiles, banking and financial services and cement exhibiting outperformance. Healthcare and metals played sound supporting roles. With rural demand still lagging behind, the consumer sector had modest growth while the IT sector had a tepid showing.

Companies constituting the Nifty50 index reported net income that rose about a fourth and earnings before interest, tax, depreciation and amortisation (EBITDA) rose over 22 per cent, mainly due to the excellent results of BPCL which turned in a profit from a loss a year ago.

The softening in raw material prices helped many in the manufacturing sector to boost their profitability metrics, though volume growth was muted.

Investment banker Jefferies said, in its review of the results, that the dichotomy from the strong number of the capex-oriented companies and weaker ones from consumer companies was palpably visible.


Demand for cars and trucks is one of the major high frequency indicators. The front-line companies in the sector forming part of the Nifty50 index had a growth of 112 per cent, exceeding street estimates. The growth was driven by Tata Motors, Mahindra & Mahindra and Maruti. There was an improvement in gross margins as well as cost efficiencies that boosted overall profitability.

Tata Motors turned in a net profit of ₹ 3,764 crore in the quarter compared to a loss of ₹944.6 crore year ago, while on a sequential basis it was 18 per cent higher. This was largely due to the price hikes taken by the company as well as the higher sales of Jaguar Land Rover.

Management commentaries from the company hinted at better sales for the rest of the year, as it doesn’t expect any stress on sales. New products are expected to drive sales growth in the next two quarters and the company is optimistic about the commercial vehicles segment being profitable in FY25.

Maruti Suzuki showed strong growth both on y-o-y and sequentially. Once the leader in small cars, the automaker’s management said that small cars were vital for the overall growth of the sector, and it would take another 2-3 years for it to revive. They also saw a stagnation in vehicle growth in FY25.

M&M gained from strong sales of its SUVs, but tractor sales did not see much of a growth with the monsoon playing hooky in August and September. The management expects tractor sales growth to be in low single digits.

Banks, Financials

Lower credit costs boosted the profitability and consequently the net interest margins of banks, with State Bank of India maintaining a distinct lead. Bank profits, excluding HDFC Bank, rose 22 per cent in the quarter.

Repricing of deposits lessened the pressure on some banks such as IndusInd Bank, Axis Bank and SBI compared to ICICI Bank and Kotak Bank.

Banks’ loan growth at 16 per cent was stable but net interest income (NII) was softer at 14 per cent. Slippages were also stable across the segment though many of them saw weak growth in CASA with a 340 basis points dip in CASA ratio. This is a challenge for banks’ NIMs in future quarters.

The results of non-banking finance companies did not throw up much of a surprise with profits rising 31 per cent y-o-y but flat sequentially. Results of Piramal Enterprises and M&M Financial Services were disappointing, though the sector saw good growth for the most part. Higher cost of funds hurt the NIMs of NBFCs on a sequential basis though that of housing finance companies fared better. Management commentaries at some of the NBFCs had indicated stress in unsecured small ticket loans, though exposure was in the range of 1-2 per cent of total advances.

IT sector

The continuing headwinds in the sector resulted in a weak performance in the sector. On an aggregative basis sequentially profits were flat, and range was from low single digits to a fall in profit. Outlook projected was also weak with guidance cuts and decline in net employee additions.

Sector bellwether Tata Consultancy Services, for instance, reported one of its weakest quarters and the commentary from the management was depressingly direction-less. MD and CEO K Krithivasan spoke of clients pausing projects and some projects getting down-sized.

Infosys fared no better with the management indicating a weak second half in FY24 and shocking the market by trimming the upper end of its full-year growth guidance.

The sector was unanimous in blaming the slowdown in the US and Europe, where bulk of its clients reside, macro headwinds across the globe and a slowdown in discretionary spends.

Consumer sector

Results in the sector was marked by weak volume growth on weak demand for consumer staples while for consumer discretionary companies there was a sharp fall in demand.

Consumer staples companies reported low single-digit volume growth. Kotak Institutional Equities said that some of the listed players could have lost market share to regional players. Part of the slowdown is also due to the long drawn out recovery in rural demand.

Sector leader Hindustan Unilever reported 2 per cent growth in its FMCG business, Britannia was stagnant while Dabur reported a 3 per cent growth. While margins improved in the FMCG segment due to lower raw material prices, it was offset to some extent by higher spends on advertising and marketing.

HUL hiked prices in its food and beverages products while it cut prices in skin cleansing and laundry products. The management said that promotion expenses will remain firm and talked about getting help from parent Unilever to expand its beauty and packaged food range.

Nuvama Research in its review of the quarter said it expected consumption demand to revive later in the year as festive season sales in October had been off to a good start. All in all, it’s been a mixed bag in Q2 for the corporate sector.