- Axis Bank’s loan growth may outpace deposits, pressuring net interest margins.
- Bajaj Auto is projected to post 18% YoY revenue growth, but margin gains hinge on cost controls.
- ITC’s modest cigarette volume rise could be eroded by a new tax surcharge.
- Selective sectors—domestic autos, FMCG, and resilient banks—offer higher upside amid cautious sentiment.
- Historical Q3 patterns suggest a 2‑3% market rally if earnings beat expectations.
You missed the early warning signs in last year’s earnings—don’t repeat that mistake now.
Why Axis Bank's Q3 Numbers Matter for Your Fixed Income Play
Elara Capital anticipates a stronger quarter‑to‑quarter loan book for Axis Bank but warns that deposit growth will lag. The net interest margin (NIM) is expected to dip because the loan mix is shifting toward lower‑yielding retail exposures. A softer NIM typically squeezes profitability, yet the recent repo‑rate cut should start to lift margins in Q4, providing a delayed tailwind.
Key metrics to monitor:
- Loan‑to‑Deposit Ratio (LDR): A higher LDR signals aggressive credit growth but can raise liquidity risk.
- Asset Quality: Watch non‑performing assets (NPAs) for any seasonal softening, especially in agriculture and technical slippages.
- Operating Expense Trend (OPEX): Controlled OPEX can underpin core profit‑per‑employee (PPoP) growth.
For investors, a bullish case rests on the bank’s ability to translate higher loan volumes into net interest income once the rate cut filters through. The bear case centers on prolonged margin compression and a possible uptick in credit stress as the economy grapples with global headwinds.
Why Bajaj Auto's Revenue Surge Could Accelerate Your Auto‑Sector Allocation
Axis Securities forecasts an 18% YoY revenue jump for Bajaj Auto, driven by a 16% volume increase. The upside stems from three pillars: robust domestic demand, a rebound in exports, and higher vehicle prices that lifted average selling prices.
Margin dynamics are equally important. The brokerage expects EBITDA margins to improve by roughly 51 basis points YoY, staying flat quarter‑to‑quarter. This margin lift is anchored in a richer product mix—more premium two‑wheelers—and disciplined cost‑control measures across the supply chain.
Historical context: In the 2019 Q3 cycle, Bajaj Auto’s earnings surprise sparked a 4% rally in the auto index. Replicating that pattern could add a similar boost to portfolios overweight in automotive stocks.
Why ITC's Modest Cigarette Volume Growth May Not Offset New Tax Headwinds
Elara Capital sees ITC’s revenue climbing 7% YoY, primarily from a 5% rise in cigarette volumes. However, the government’s recent tax hike on tobacco products creates a lingering overhang that could erode profit margins.
EBITDA is projected to edge up 0.1% YoY—essentially flat—reflecting the tax’s drag on operating profitability. The FMCG giant’s diversification into hotels, paperboards, and agribusinesses provides a buffer, but the core tobacco segment remains the cash‑cow.
Investors should weigh the trade‑off: a bullish scenario assumes successful cross‑selling of higher‑margin FMCG lines, while a bearish outlook hinges on further regulatory pressure and shifting consumer preferences toward healthier alternatives.
How the Broader Q3 Earnings Landscape Shapes Indian Market Momentum
The upcoming week features roughly 500 companies reporting results for the quarter ended 31 December 2025. Market experts anticipate that stock‑specific moves will dominate, with overall sentiment staying cautious due to global macro uncertainties, currency volatility, and mixed earnings quality.
Sector‑level takeaways:
- Banking: Expect divergent performances; private banks with stronger retail loan pipelines may outshine slower‑moving public‑sector peers.
- Automobiles: Domestic demand remains resilient, buoyed by low‑cost financing and rising disposable incomes.
- Telecom: Vodafone Idea’s results could signal whether the sector can recover from its debt‑laden past.
- Technology & Payments: Paytm’s earnings will be a litmus test for the fintech growth narrative amid tightening regulatory scrutiny.
Historically, Indian markets have delivered a 2‑3% rally in the week following a strong earnings season, provided that headline numbers beat consensus estimates. That pattern, if repeated, offers a timing cue for tactical re‑entries.
Investor Playbook: Bull vs. Bear Cases for the Q3 Season
Bull Case
- Axis Bank’s loan growth outpaces deposit slowdown, and Q4 margin recovery materializes.
- Bajaj Auto’s volume surge translates into sustained revenue momentum and margin expansion.
- ITC successfully monetizes its non‑tobacco businesses, offsetting the tax impact.
- Selective exposure to resilient domestic demand sectors (autos, FMCG, private banks) generates alpha.
Bear Case
- Persistent NIM pressure at Axis Bank drags earnings lower, prompting a sector‑wide sell‑off.
- Supply‑chain bottlenecks curb Bajaj Auto’s export growth, while price hikes meet consumer resistance.
- Further tobacco tax increases or regulatory curbs shrink ITC’s profit base.
- Global risk aversion spikes, triggering capital outflows and a broader market correction.
Actionable steps:
- Trim exposure to banks with high LDRs and weak asset‑quality trends.
- Add to high‑quality auto manufacturers that demonstrate strong volume and cost‑control metrics.
- Consider a cautious stance on ITC—maintain exposure for dividend yield but limit upside bets until tax pressure eases.
- Stay nimble: keep a portion of capital in cash to deploy on any earnings surprises that break through consensus.