From Tata Motors to Adani: 141 companies see profits & sales decline in Q1. Is your portfolio at risk?

The June quarter earnings season, which investors desperately hoped would provide a positive trigger for market recovery, failed to provide support to share prices as recovery hopes have now shifted to the next quarter or second half of FY26. The Q1 result season saw at least 141 companies across sectors reported simultaneous declines in both sales and profit on a year-on-year basis.

Auto giant Tata Motors, despite generating massive revenues of ₹1,03,792 crore, saw profits drop by 31% from ₹5,587 crore to ₹3,871 crore as sales declined 2.5%. Hero MotoCorp, the world’s largest two-wheeler manufacturer, managed to limit profit decline to just 1% but couldn’t prevent a 5% sales drop to ₹9,728 crore.

Auto components major Sona BLW Precision Forgings, despite generating ₹854 crore in sales, saw profits decline 14% to ₹122 crore, reflecting the automotive sector’s broader challenges. Hyundai Motor India managed to limit profit decline to 8% at ₹1,369 crore but couldn’t prevent a 5.6% sales drop to ₹16,180 crore.

Asian Paints saw Q1 sales drop marginally by 0.2% to ₹8,924 crore while profits declined 6% to ₹1,081 crore. The paint sector’s woes deepened with Indigo Paints and Akzo Nobel India both reporting double-digit profit declines.

PSU behemoth Coal India reported a 21% profit decline to ₹8,590 crore on sales of ₹31,880 crore. Power major NTPC saw profits crash 32% and revenue fall 3%.

Live Events

The technology sector felt the pain, with Tata Elxsi posting a 22% profit decline to ₹144 crore on falling sales of ₹892 crore. Route Mobile saw profits crash 28% while Birlasoft reported a 29% earnings decline.The consumer sector, typically considered recession-proof, showed cracks with Colgate-Palmolive India posting a 12% profit decline to ₹321 crore despite maintaining sales above ₹1,420 crore. Havells India, the electrical goods major, saw profits drop 15% to ₹348 crore.The Adani empire felt the pressure with Adani Enterprises reporting a massive 46% profit fall to ₹895 crore despite sales of ₹21,961 crore, marking a significant 14% revenue decline. However, Adani Power showed relative resilience, limiting profit decline to 16% at ₹3,305 crore on sales of ₹14,109 crore.Metals giant Hindustan Zinc saw profits drop 5% to ₹2,234 crore on sales of ₹7,591 crore, while chemicals major Aarti Industries witnessed a devastating 69% profit collapse to just ₹43 crore despite maintaining substantial sales of ₹1,676 crore.

Brokerage giant Angel One, despite generating ₹1,141 crore in sales, saw profits crash 61% to ₹114 crore, highlighting the challenging environment for financial intermediaries. Rail equipment manufacturer Titagarh Rail Systems reported a 40% profit decline to ₹43 crore on falling sales of ₹679 crore.

Premium winery Sula Vineyards faced a brutal quarter with profits collapsing 87% to just ₹1.9 crore as sales declined 8% to ₹118 crore, reflecting the discretionary spending slowdown hitting luxury consumption.

Some of the worst-hit include DAM Capital Advisors where profits crashed 99% from ₹22 crore to just ₹23 lakh. PSP Projects saw earnings wipe out by 99% to ₹43 lakh. Bajaj Electricals’ profits collapsed 94% to just ₹1.6 crore while Praj Industries’ bottomline fell 94% to ₹5.3 crore.

What should investors do?

Despite the widespread earnings disappointment, market veterans remain cautiously optimistic about the road ahead.

“Earnings growth for FY25 is tracking in line with expectations at high single digits, and consensus estimates for the next two years point towards a recovery to low double-digit growth,” said Shridatta Bhandwaldar, Head Equities, Canara Robeco Asset Management Company. “Midcaps continue to show the strongest earnings resilience, followed by large caps, while small caps remain a concern given stretched valuations and weaker earnings trends.”

Bhandwaldar expects consolidation to continue until earnings momentum strengthens. “In our portfolios, we remain constructive on large banks, insurance, industrials, telecom, pharma, aviation, and hospitals, while staying cautious on global commodities, tier-2/3 NBFCs, and FMCG until clear signs of recovery emerge,” he added.

Satish Mishra, Fund Manager, Tata Asset Management, acknowledged the weakness but found silver linings. “Q1FY26 earnings season has been weak but broadly in line with expectations. Large sectors like IT, financials, auto and consumer have shown weak earnings growth while few sectors like cement, healthcare have shown strong earnings growth,” he said.

Mishra remains optimistic about the second half. “We do believe that earnings growth in H2FY26 will be better than H1. The RBI’s frontloaded 100-bps rate cut, ₹1 lakh crore in tax relief in budget and favourable monsoon are all expected to stimulate credit growth and consumption.”

Jimeet Modi, Founder & CEO, SAMCO Group, sees opportunity in the current turmoil. “Q4 FY25 earnings came in below expectations, with broad-based profit pressures across the segment. This reinforces the need for caution, even as valuations have moderated post the July correction,” he said. “The recent dip has reset market expectations, creating a more favourable entry point for sound companies. With India’s structural growth drivers intact and domestic liquidity remaining robust, smallcaps could see improved traction in H2 FY26.”

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}