- Profit surges at Persistent Systems, IndiaMART, and AU Small Finance Bank signal tech and fintech upside.
- Sharp profit declines at Supreme Petrochem and Rallis India highlight sector stress.
- Strategic PPAs and acquisitions (JSW Energy, Tata Steel) could reshape power and steel landscapes.
- Key balance‑sheet metrics – EBIT margins, NPA trends, and foreign‑currency revenue – are moving in divergent directions.
- Actionable playbook: overweight tech‑enabled firms, trim exposure to commodity‑heavy losers.
You missed the quiet surge in India's Q3 earnings, and that could cost you.
Today's earnings season is a mixed bag of headline‑grabbing profit jumps and sobering revenue drops. While a handful of high‑growth names are delivering double‑digit top‑line expansion, legacy heavyweights are grappling with margin compression and macro headwinds. For a disciplined investor, the real story lies in the sectoral reallocation of capital, the competitive dynamics that follow, and the historical patterns that often repeat after a earnings shock.
Why India Q3 Earnings Matter for the Tech and Fintech Wave
Persistent Systems posted a 17.8% profit rise and a 23.4% revenue surge, while its EBIT jumped 19.1%. IndiaMART’s profit exploded 55.6% on a 13.4% top‑line gain, buoyed by a Rs 135.4 crore surge in other income. AU Small Finance Bank posted a 26.3% profit jump and a 15.7% lift in net interest income, with gross NPA easing to 2.30%.
These numbers echo the broader Indian tech and fintech tailwinds: accelerated digital adoption, higher consumer credit demand, and a favorable regulatory environment. The RBI’s recent guidance on digital lending and the government's push for cash‑less payments create a virtuous cycle for firms that own the data pipelines and credit‑assessment engines.
Competitor analysis shows Tata Consultancy Services and Infosys still dominate the export‑oriented software space, but mid‑tier players like Persistent are narrowing the gap by focusing on niche verticals such as industrial IoT and cloud migration services. In fintech, HDFC Bank’s steady leadership is now challenged by aggressive small‑finance lenders, with AU Small Finance emerging as a credible alternative for the under‑banked.
Why the Energy and Steel Sectors Face a Structural Headwind
Supreme Petrochem’s profit plunged 57.7% and revenue fell 10%, while Rallis India’s profit sank 81.8% despite a 19.3% revenue rise. Both companies are exposed to volatile commodity prices and policy shifts in fertilizer subsidies and petrochemical imports.
JSW Energy’s new 1,600 MW ultra‑supercritical thermal plant in West Bengal signals a bet on cleaner coal technology, but the long‑term outlook remains uncertain as renewable capacity additions accelerate. Tata Steel’s acquisition of a controlling stake in Thriveni Pellets reflects a diversification into downstream value‑added products, yet the core steel margins are still pressured by global overcapacity and raw‑material cost spikes.
Historically, the Indian steel sector has experienced cyclical busts every 4‑5 years, with the last major downturn in 2018 leading to consolidation and a shift toward higher‑margin specialty steel. Investors who timed entry during the 2019 bottom earned double‑digit returns as the sector recovered. The current mix of strategic acquisitions and green‑energy projects could replicate that upside if execution improves.
Why Revenue Mix Shifts Matter for Export‑Sensitive Companies
Persistent’s dollar‑denominated revenue jumped 17.3% to $422.5 million, highlighting the benefit of a diversified client base. Similarly, IndiaMART’s overseas advertising spend contributed to its other‑income spike. Companies that earn a larger share of revenue in foreign currency can hedge against rupee depreciation, which has been a persistent concern in 2024‑25.
Definition: Other income refers to non‑core earnings such as gains on investments, foreign exchange gains, or one‑off commissions. While not recurring, a sustained rise in other income often signals a successful monetization of ancillary assets.
Why Credit Risk Metrics Are a Early Warning Signal
AU Small Finance Bank’s gross NPA fell to 2.30% from 2.41%, and net NPA stabilized at 0.88%. In contrast, Shoppers Stop posted an exceptional loss of Rs 17.7 crore, a red flag for retail exposure to weak consumer spending. CreditAccess Grameen turned a Rs 99.5 crore loss into a Rs 252.1 crore profit, underscoring the volatility of micro‑finance earnings linked to rural credit cycles.
Investors should monitor the Net Interest Income (NII) trend as a proxy for asset‑quality health. A rising NII, as seen at AU Small Finance, typically indicates better loan‑book performance and pricing power.
Investor Playbook: Bull and Bear Cases
Bull Case: Double‑down on tech‑enabled firms (Persistent, IndiaMART) and agile lenders (AU Small Finance, CreditAccess) that demonstrate resilient margins, foreign‑currency exposure, and improving asset quality. Allocate a modest portion to renewable‑oriented energy assets (JSW Energy) to capture the transition premium.
Bear Case: Trim exposure to commodity‑heavy stocks (Supreme Petrochem, Rallis India) and legacy retail (Shoppers Stop) that are wrestling with margin erosion and exceptional losses. Keep a watchful eye on macro‑inflation, RBI policy shifts, and global trade dynamics that could further squeeze earnings.
In summary, today’s earnings mosaic paints a picture of a market in transition: high‑growth, digitally native players are expanding their moat, while traditional heavy‑industry and consumer names face structural challenges. Aligning your portfolio with the winners of this transition could be the difference between catching the next rally and watching it pass you by.