Fourth Quarter Earnings Watch: India’s profit-hungry companies rely on employee expenses
Amid geopolitical uncertainty and market volatility, Indian companies managed to keep profits in the March quarter (Q4FY25). However, detailed analysis of profitable companies shows that as companies actively protect their lowest points, many profitability involves reducing wage bills.
Analysis of BSE publicly traded companies based on independent data from Capitaline shows that for an increasing number of profit-making companies, net profit growth exceeded the increase in employee costs in the March quarter, highlighting the growth in the relevant trend.
About 71% of these profit-making companies’ net profit growth exceeded the fourth quarter’s wage cost growth, up from 69% from the October-December period. Mint Analysis shows. This shows an emerging model of prioritizing profit over labor spending.
A rolling sample of 107 profitable companies in the March quarter was analyzed, compared with 128 in the previous quarter.
The impact of slowing income
MINT’s analysis of Q4 data reinforces a similar pattern found in the third quarter review, which shows that total net profits of 3,577 listed companies have increased despite three consecutive quarters of slowdown in revenue. This difference between revenue performance and profit growth raises key questions about the sustainability of a company’s profit strategy.
A common sample of 270 companies also showed a clear slowdown in growth data. On average, net profit increased by 8.4% year-on-year in the March quarter, a sharp decline from the December quarter by 15.7%. Employee expenses fell 5.8% year-on-year in the March quarter, while expenses slowed by 7.8% in the December quarter.
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Of these companies, 84 reported a decline in net profit in the fourth quarter, up from 75 in the previous three months. It is worth noting that 57 of the 84 struggling companies increased their employee expenses in the fourth quarter, while 62 of the 75 did this in the third quarter.
Salary contractions for seven companies have decreased by only two companies in the previous quarter, highlighting the increase in companies that prioritize profits in the current volatility environment.
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Reliance Industrial Infrastructure Ltd is an example of a company whose wage costs have decreased outweighed profit shrinkage.
As Indian companies continue to face economic headwinds, the pattern of protecting margins through cost cuts in the absence of any meaningful revenue growth could indicate a deeper structural challenge in maintaining profitability and employee compensation.
This is the fourth part of a series of data stories about the ongoing earnings season. read The first,,,,, second and third Part here.
