India's Corporate Growth Landscape: Ventura Securities
Ventura Securities analyzed the growth narratives of 1,000 leading companies across 33 key sectors shed light on the dynamics driving or impeding growth in the current environment.
The recently released GDP figures for Q2FY25, at 5.4%, fell significantly short of the RBI's projection of 7% (7.2% for full year FY25). This notable slowdown has raised concerns about the economic trajectory of the country, particularly for sectors and companies that have been integral to India’s growth narrative. A substantial portion of this slowdown can be attributed to factors such as the Lok Sabha elections in Q1FY25, widespread flooding due to torrential rains across many parts of the country, and a deceleration in government spending.
Agriculture, forestry, and fishing, a sector deeply tied to the rural economy, saw its growth drop from 3.5% in FY21 to 2.4% in FY26, reflecting the adverse effects of irregular weather conditions and lower productivity. Similarly, manufacturing, a backbone of economic activity, displayed a consistent deceleration, with its growth falling from a robust 4.6% in FY21 to a muted 2.9% in FY26, indicative of weak demand and global headwinds.
The construction sector, which is crucial for employment generation, saw its growth drop to 3.3% in FY26 compared to earlier periods of higher expansion, likely influenced by reduced government infrastructure spending and supply chain disruptions. Trade, hotels, transport, and communication, however, remained resilient, clocking a growth of 7.4% in FY26, showcasing recovery in post-pandemic consumption and mobility. On the other hand, public administration, defence, and other services, traditionally a steady growth contributor, recorded a sharp decline to 3.9%, reflecting the effects of government fiscal tightening.
This granular sectoral analysis underscores the critical need for targeted policy interventions to rejuvenate growth, particularly in manufacturing and agriculture, while capitalizing on the momentum in sectors like trade and hospitality. Ventura’s extensive sectoral insights and corporate data will provide stakeholders with a clear picture of growth opportunities and challenges in the coming quarters.
Automotive – Higher dealer inventory and slowdown in demand affected the performance
- In Q2FY25, the automotive sector reported a subdued YoY performance. Revenue grew at a YoY rate of 2.9% to INR 3,10,174 cr, while EBITDA and net earnings declined by 2.4% and 6.9% to INR 39,564 cr and INR 18,240 cr respectively.
- Muted demand for PVs & CVs due to dealer inventories and high base of last couple of years impacted the sales volumes. 2Ws & tractors, however, did well owing to favorable base and recovery in rural demand.
Outlook- We expect demand revenues to sustain for tractors on the back of rural demand revival, however, growth in 2W, PV and CV could remain in single digit.
Cables & wires – Strong order booking and faster execution improved the business performance
- In Q2FY25, the cables & wires sector reported a mixed bag YoY performance. Revenue grew at a YoY rate of 22.7% to INR 11,490 cr, however, EBITDA and net earnings declined at a YoY rate of 1.3% and 2.9% to INR 1,099 cr and INR 776 cr respectively.
- Rising demand from real estate is improving the demand for home cables, while expansion of power transmission network and expansion of high KVA cables are driving the demand for heavy wires.
- Heightened competitive intensity negatively impacted the sectors business performance, while volatile raw material prices, especially copper prices, affected the profit margins.
Capital goods – Strong demand from power and infrastructure sectors are improving the business performance
- In Q2FY25, the capital goods sector reported a strong YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 19.3%/ 28.5%/ 35.6% to INR 69,373cr/ INR 9,074 cr/ INR 5,954 cr respectively.
Outlook- Domestic order inflows are gaining momentum, driven by robust demand in the infrastructure and power sectors, along with a pickup in both private and public capex. Additionally, growing demand from data centers and industrial automation is further accelerating this growth.
Cement & cement products – Weak cement prices impacted the business performance
- In Q2FY25, the cement sector reported a subdued YoY performance. Revenue/ EBITDA/ net earnings declined at a YoY rate of 5.6%/ 25.4%/ 59.5% to INR 48,924 cr/ INR 5,943 cr/ INR 1,499 cr respectively.
- Cement prices continued to remain weak in Q2FY25 attributed to prolonged monsoon, ongoing sector consolidation and seasonally weak quarter.
Outlook- We believe that cement prices have bottomed out in Q2FY25, and gradual recovery is anticipated in H2FY25E due to government push on infrastructure projects and sustained improvement in real estate and housing demand.
Chemicals & fertilizers – Improving demand for agrochemicals and short supply of specialty chemicals are driving the performance
- In Q2FY25, the chemicals & fertilizers sector reported a moderate YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 5.8%/ 10.3%/ 1.4% to INR 96,028 cr/ INR 12,817 cr/ INR 5,395 cr respectively.
- Improving demand for agrochemicals due to the end of destocking and short supply of carbon black &specialty chemicals in the domestic market is driving the revenue performance. Chinese dumping is largely ended, which is improving the profitability.
Construction materials – Mixed bag performance. Sales increased, but competition eroded margins
- In Q2FY25, the construction material sector reported a mixed YoY performance. Revenue grew at a YoY rate of 6.2% to INR 8,159 cr, however, EBITDA and net earnings declined at a YoY rate of 17.2% and 27.9% to INR 785 cr and INR 352 cr respectively.
- Sustained improvement in real estate and housing demand increased the sector’s revenue performance, however, heightened competitive intensity and over capacity negatively impacted the sectors profitability.
Outlook- Real estate is expected to drive the sector’s performance. We are expecting a gradual recovery.
Consumer electronics & goods – Improving demand in tier 2&3 cities and rural areas are driving the performance
- In Q2FY25, the consumer electronics & goods sector reported a strong YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 39.4%/ 25.7%/ 50.7% to INR 35,617cr/ INR 2,713 cr/ INR 1,595 cr respectively.
- The sector's performance is being driven by growing demand in tier 2 and 3 cities, as well as rural areas. Consumer affordability in these regions is on the rise, with customers increasingly willing to spend. Additionally, demand is gradually shifting from value products to the mid-to-premium segments.
Defence – Strong order booking, export opportunity and faster execution improved the business performance
- In Q2FY25, the defence sector reported a strong YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 15.5%/ 26.4%/ 29% to INR 17,164 cr/ INR 4,096 cr/ INR 3,726 cr respectively.
- Strong government push towards defence equipment indigenization and increasing export opportunities in developing countries enhanced the order booking, while faster execution improved the revenue booking & asset sweating.
Diversified – Growth in new business verticals offset by traditional businesses, while cost pressure impacted profitability
- In Q2FY25, the infrastructure sector reported a weak YoY performance. Revenue grew at a YoY rate of 3.1% to INR 3,01,837 cr, however, EBITDA reported a YoY decline of 0.4% to INR 49,751 cr.
- Growth in new business verticals were offset by traditional businesses, especially in case of Adani Enterprise and Reliance Industries, while cost pressure impacted profitability.
E-commerce & E-retail – Deep internet penetration and rising usage of online platforms are key drivers
- In Q2FY25, the E-commerce & E-retail sector reported a strong YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 20.2%/ 82.2%/ 412.5% to INR 13,536 cr/ INR 966 cr/ INR 1,886 cr respectively.
- Rising internet penetration in India and increasing usage of online platforms for food delivery, grocery purchase, online/UPI payments, etc. are accelerating the business prospects for the sector.
- Most of the companies in this sector have already recovered their operating cost and started reporting profits. Operating leverage will further accelerate the profitability.
Financial services – Rally in capital markets and increasing investor participation is improving the business prospects
- In Q2FY25, the financial services sector reported a strong YoY performance. Revenue and net earnings grew at a YoY rate of 14.5% and 16.5% to INR 2,70,927 cr INR 20,320 cr respectively.
- Rally in capital markets improved the investor participation which benefitted the financial intermediaries, AMCs and insurance companies. Fund inflows remain robust despite volatile Indian equity markets.
FMCG – Competition from regional players negatively impacting the business performance
- In Q2FY25, the FMCG sector reported a single digit YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 6.8%/ 4.7%/ 6% to INR 1,20,607 cr/ INR 15,361 cr/ INR 10,235 cr respectively.
- Heightened competitive intensity from regional players negatively impacted the sectors business performance, while volatile raw material prices affected the profitability.
- Favorable product mix and gradual shift in consumer preference to mid-to-premium FMCG products are the few green shoots for the sectors.
Gems & jewelry – Reduction in custom duty surged demand, but affected profitability
- In Q2FY25, the gems & jewelry sector reported a mixed bag YoY performance. Revenue grew at a YoY rate of 24.4% to INR 26,876 cr, while EBITDA and net earnings declined by 5.8% and 16.3% to INR 1,889 cr and INR 979 cr respectively.
- The reduction in custom duties (CD) made gold more affordable for consumers, driving a surge in demand. Furthermore, the growing consumer interest in gold, spurred by global uncertainties, further boosted revenues. However, the decline in CD also led to higher inventory losses, negatively affecting the profitability of jewelers. This, however, is expected to be a one-time impact.
Healthcare & pharma – Continued growth in the chronic therapy category boosted the performance
- In Q2FY25, the infrastructure sector reported a strong YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 12.3%/ 15.2%/ 17.9% to INR 1,13,908 cr/ INR 15,423 cr/ INR 6,905 cr respectively.
- The continued growth in the chronic therapy category boosted the performance of pharmaceutical companies, with margins remaining high due to lower raw material costs. Diagnostics companies and hospitals also delivered strong results during a seasonally favorable quarter.
Holding companies – Strong performance of the portfolio companies and their healthy dividend payouts enhanced the overall performance
- In Q2FY25, the holding companies reported a strong YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 26.6%/ 32.1%/ 40.3% to INR 9,790cr/ INR 4,814 cr/ INR 852 cr respectively.
- The robust performance of portfolio companies, coupled with their substantial dividend payouts, significantly boosted the overall performance of the holding companies.
Infrastructure – Strong order booking and faster execution improved the business performance
- In Q2FY25, the infrastructure sector reported a strong YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 12.3%/ 15.2%/ 17.9% to INR 1,13,908cr/ INR 15,423 cr/ INR 6,905 cr respectively.
- Strong government push towards railway/roads enhanced order booking, while faster execution improved the revenue booking & asset sweating. This trend is likely to sustain due to Development of railway DFCs, Metro line expansion in tier 2&3 cities and upgradation of city infrastructure. Development of new expressways and ring roads
IT/ITES – Recovery in the discretionary spending, post the US Fed rate cuts is improving the outlook
- In Q2FY25, the infrastructure sector reported a moderate YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 6.9%/ 8.2%/ 10.3% to INR 2,19,462 cr/ INR 46,716 cr/ INR 32,206 cr respectively.
- Recovery in the discretionary tech spending, post the US Fed rate cuts is improving the outlook for the Indian IT companies. However, geopolitical uncertainties and possibility of economic stagnation could impact the business performance.
- Indian IT companies are entering in generating AI and strengthening their business in cloud services. These two verticals are expected to drive the business.
Lending services – Strong credit demand increased the interest income, but contraction of NIMs impacted the bottom-line
- In Q2FY25, the lending services sector reported a moderate YoY performance. Revenue and net earnings grew at a YoY rate of 14.5% and 11.9% to INR 6,89,681 cr INR 1,24,373 cr respectively.
- Although NIMs contracted for several banks as cost pressures persisted due to intense competition for liabilities and continued pressure on the CASA mix, asset quality trends stood strong and lenders reducing credit cost guidance.
Logistics – Strong demand activity and improved logistics infrastructure aided the business growth
- In Q2FY25, the logistics sector reported a strong YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 13.1%/ 13.8%/ 30.3% to INR 29,510 cr/ INR 7,736 cr/ INR 4,276 cr respectively.
- Despite the heavy rainfalls in most of the geographies, the sector reported double digit revenue and profit growth due to increasing demand activity. In the long term, we are optimistic about sector growth, driven by e-way bills, GST implementation, expanded routes on the railway DFCs, and enhanced connectivity of major ports.
Media & entertainment – Lack of quality content impacted the business performance
- In Q2FY25, the media & entertainment sector reported a weak YoY performance. Revenue/ EBITDA/ net earnings declined at a YoY rate of 7.3%/ 19.9%/ 11.3% to INR 7,637 cr/ INR 1,256 cr/ INR 474 cr respectively.
- Lack of content and volume pressure impacted the business performance of the sector. Price adjustments and fresh releases lined for December 2024 are expected to enhance revenue growth and profitability in Q3FY25.
Metals & mining – Flat performance. Subdued pricing offset by improving domestic demand
- In Q2FY25, the metals & mining sector reported a flat YoY performance. Revenue declined at a YoY rate of 0.6% to INR 275,933 cr, while EBITDA grew at a YoY rate of 0.5% to INR 43,932 cr. Metal companies witnessed a strong domestic demand, however, weak pricing impacted the revenue performance.
- We believe that global uncertainties might pose challenges to international steel, base metal, and raw material prices in the short term. Improving domestic demand, especially from infrastructure, real estate and capital goods could offset the pricing pressure.
Oil & gas – Weak spreads in crude oil refineries impacted the performance
- In Q2FY25, the oil & gas sector reported a subdued YoY performance. Revenue grew at a YoY rate of 4.4% to INR 4,54,906 cr, while EBITDA & net earnings declined at a YoY rate of 37.2% & 40.1% to INR 37,754 cr & INR 19,928 cr respectively.
- Higher refining volumes amid increased domestic demand are increasing the revenues, however, decline in transportation fuel cracks and continued weakness in downstream chemical deltas impacted margins.
Outlook- Crude oil prices are expected to remain stable due to increasing supplies from non-OPEC players pushed prices lower even though OPEC+ countries extended voluntary production cuts.
Paints & adhesives – Competition impacted the sectors business performance and volatile raw material prices affected the profitability
- In Q2FY25, the paints & adhesives sector reported a weak YoY performance. Revenue/ EBITDA/ net earnings declined at a YoY rate of 1.2%/ 14.5%/ 22.2% to INR 17,441 cr/ INR 2,881 cr/ INR 1,758 cr respectively.
- Heightened competitive intensity and over capacity negatively impacted the sectors business performance, while weak export volumes, adverse product mix and volatile raw material prices affected the profitability.
Paper & packaging – Mixed bag performance. Low single digit revenue growth and pressure on profit margins
- In Q2FY25, the paper & packaging sector reported a moderate YoY performance. Revenue and EBITDA grew at a YoY rate of 8.6% and 3.9% to INR 8,261 cr and INR 1,212 cr respectively, while net earnings declined by 4.2% YoY to INR 524 cr.
- Lower price imports from ASEAN countries restricted the revenue growth, while volatile raw material prices impacted the profit margins. This trend is likely to sustain, and the financials could remain under pressure.
Plastic products – Competition restricted the revenue growth, while volatile raw material prices impacted the profitability
- In Q2FY25, the plastic products sector reported a mixed YoY performance. Revenue grew at a YoY rate of 4.1% to INR 7,823 cr, however, EBITDA and net earnings declined at a YoY rate of 13.2% and 22.2% to INR 925 cr and INR 541 cr respectively.
- Rising consumer demand and sustained improvement in real estate & housing demand moderately increased the sector’s revenue performance, however, heightened competitive intensity and over capacity negatively impacted the sectors profitability.
Power – Fuel price volatility, grid constraints and infrastructure cost impacted the profitability
- In Q2FY25, the power sector reported a weak YoY performance. Revenue grew at a YoY rate of 4.7% to INR 1,24,269 cr, however, EBITDA and net earnings declined at a YoY rate of 1.6% and 13.2% to INR 42,375 cr and INR 18,852 cr respectively.
- Sustained demand for power improved the revenue, however, challenges such as fuel price volatility, grid constraints and increase in infrastructure cost impacted the profitability. Overall, the outlook for the remainder of FY25 remains cautiously optimistic, with government support and continued demand growth likely to drive performance.
Real Estate – Favorable pricing and an improved mix are delivering strong business performance
- In Q2FY25, the real estate sector reported a strong YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 30.7%/ 28.7%/ 36% to INR 17,066cr/ INR 4,780 cr/ INR 4,002 cr respectively.
- Favorable pricing and an improved mix are delivering strong business performance. This uptick reflects growing confidence in the sector’s resilience and potential for recovery.
Outlook- The trend is likely to sustain due to rising demand from tier 2&3 cities along with gradual recovery in real estate prices.
Recycling – Environmental concerns are driving the performance
- In Q2FY25, the recycling sector reported a strong YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 13.2%/ 24.1%/ 51.5% to INR 1,657 cr/ INR 185 cr/ INR 140 cr respectively.
- The sector is benefiting from the regulatory advancements in electronic and battery waste management rules. Expanding procurement network and improving utilization, the sector is positioned for a decadal growth.
Retail – Shift from unorganized to organized retailing trend is improving the business
- In Q2FY25, the retail sector reported a strong YoY performance. Revenue and EBITDA grew at a YoY rate of 17.8% and 16.6% to INR 35,498 cr and INR 3,659 cr respectively.
- Improving consumer spending in tier 2&3 cities and shift in buying preference from unorganized to organized retail is accelerating the business performance of Indian retailers, especially low cost high discretionary apparel and fashion retails.
Telecom – Rise in ARPU and improving subscriber mix is accelerating the growth
- In Q2FY25, the telecom sector reported a strong YoY performance. Revenue and EBITDA grew at a YoY rate of 13.5% and 16.3% to INR 75,058 cr and INR 34,513 cr respectively, which net losses reduced from INR 5812 cr in Q2FY24 to INR 358 cr in Q2FY25
- The sector's revenue performance and profitability have been boosted by past tariff hikes and increased data usage. Furthermore, the nationwide rollout of 4G, along with the growing adoption of 5G in urban areas, is driving business growth for tower companies
Textiles – Improving domestic demand and shift in export-oriented manufacturing from Bangladesh to India are driving growth
- In Q2FY25, the textiles sector reported a strong YoY performance. Revenue/ EBITDA/ net earnings grew at a YoY rate of 12.9%/ 13.2%/ 9.5% to INR 27,667 cr/ INR 3,057 cr/ INR 1,416 cr respectively.
- Improving domestic demand and shift in export oriented manufacturing from Bangladesh to India are driving growth.
- De-stocking by global retailers last year is improving the fresh demand, which is increasing the export orders and the trend is likely to sustain.
Travel & tourism – Demand tailwinds is driving the business performance
- In Q2FY25, the travel & tourism sector reported a good YoY performance. Revenue and EBITDA grew at a YoY rate of 8.5% and 9.2% to INR 27,707 cr and INR 4,255 cr respectively.
- Demand tailwinds in the sector remain intact on the back of steady economic growth, improving rail/road/air connectivity, demand-supply gap in hotel industry, and potential recovery in foreign tourist arrivals.
- Promotion of pilgrimage and wild-life tourism by government is expected to boost the sentiments for the sector.
Trading & services – Business growth increased the revenue, however, operating expenses squeezed the profit margins
- In Q2FY25, the trading & services sector reported a mixed bag YoY performance. Revenue grew at a YoY rate of 11.8% to INR 38,538 cr, however, EBITDA and net earnings reported a single digit YoY growth of 1.7% and 5.5% to INR 1,215 cr and INR 749 cr respectively.
- The segment’s revenue growth was driven by business expansion; however, it was offset by higher operating expenses and cost pressure, leading to compressed profit margins.
Trading & services – Business growth increased the revenue, however, operating expenses squeezed the profit margins
- In Q2FY25, the trading & services sector reported a mixed bag YoY performance. Revenue grew at a YoY rate of 11.8% to INR 38,538 cr, however, EBITDA and net earnings reported a single digit YoY growth of 1.7% and 5.5% to INR 1,215 cr and INR 749 cr respectively. The segment’s revenue growth was driven by business expansion; however, it was offset by higher operating expenses and cost pressure, leading to compressed profit margins.
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