NIFTY 100 Earnings Thermometer: Heat in Revenues, Coolness in Profits

Revenue Growth Strengthens on a Breadth Basis

The Nifty 100 delivered a healthy 8.75% YoY revenue growth in the Dec’25 quarter. While the headline number appears steady, a deeper earnings breadth analysis highlights a more meaningful structural shift beneath the surface.

A year-on-year comparison shows:

• The proportion of companies reporting sub-10% revenue growth or revenue decline has reduced materially.
  
  
• In the year-ago quarter, over 50% of companies fell into the low-growth or degrowth category.
  
  
• This figure has now declined to 41% in Dec’25, indicating improving revenue momentum.
  
  

The distribution of companies has gradually shifted from the lower growth buckets (<0% and 0–10%) toward the 10–20% and >20% growth segments, suggesting broader participation in topline expansion across index constituents.

This improvement reflects healthier demand conditions and better revenue traction across sectors.

Profitability Lags Despite Revenue Expansion

While revenue breadth has strengthened, profitability trends tell a different story.

• Aggregate PAT growth stands at just 5% YoY.
  
  
• The proportion of companies reporting degrowth or PAT growth up to 10% has increased from 43% in Dec’24 to 53% in Dec’25.
  
  

This divergence between revenue and profit growth signals margin compression across corporate India’s large-cap universe.

Key Factors Pressuring Margins

Two major factors have weighed on profitability:

1. Implementation of the New Labour Code
   
   
   • Led to one-time provisioning expenses related to employee benefits.
     
     
   • Increased operating cost burden in the short term.
     
     
2. Elevated Commodity Prices
   
   
   • Raw material inflation exerted pressure on gross margins.
     
     
   • Limited pricing pass-through in certain sectors impacted bottom-line growth.
     
     

These cost-side pressures diluted the impact of stronger revenue performance.

What the Breadth Data Signals

• Topline momentum is broad-based and structurally improving.
  
  
• Bottom-line growth remains uneven and cost-sensitive.
  
  
• Earnings recovery is currently revenue-led rather than margin-led.
  
  

If commodity pressures ease and one-time provisions normalise, profitability could catch up with revenue momentum in subsequent quarters.

Conclusion

The Dec’25 quarter highlights a clear divergence within the Nifty 100:

• Revenues show heat and expansion across a wider base of companies.
  
  
• Profits remain cool due to margin headwinds and cost adjustments.
  
  

Overall, the earnings breadth data suggest that while corporate India’s large-cap universe is witnessing improving demand conditions, sustainable profit acceleration will depend on margin stabilisation in the coming quarters.