India Inc's FY25: A Year of Sluggish Growth Amid Cost-Cutting and Weak Demand
Indian companies faced a slowdown in profit growth for FY25, primarily due to weak demand and declining capital expenditure, according to a Nuvama Research report. The BSE500 index firms, except Oil Marketing Companies, saw a drop in profits from the previous year. FY26 forecasts remain cautious amid stagnant earnings projections.
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In FY25, Indian companies experienced a deceleration in profit growth, largely attributed to waning demand and decreased capital expenditure, as per a Nuvama Research report. The report highlights that firms in the BSE500 index, excluding Oil Marketing Companies, registered only 10% profit growth year-on-year in Q4FY25, significantly lower than the 21% growth rate achieved in FY24.
While some sectors, including metals, telecom, chemicals, and cement, reported profit improvements, others, like public sector banks and industrials—key growth drivers in FY24—witnessed a slowdown. This dispels the illusion of robust growth, underscored by a mere 6% increase in capital expenditure in the latter half of FY25, compared to the 20% witnessed in FY23 and FY24.
Despite stabilizing to pre-COVID trends with profit, revenue, and capex growth rates lingering around 8-10%, the future for FY26 is cloaked in uncertainty. Earnings forecasts for FY26 have been adjusted downward by 2%, with forward earnings per share projections stagnating. Nuvama urges caution, citing potential risks from weak demand, reduced credit growth, corporate cost-cutting initiatives, and volatile export conditions.
(With inputs from agencies.)
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