India’s Nifty 50 delivered mixed bag results for October-December: revenues up 10% excluding key sectors, yet net profits cratered 8.1% across 37 companies—the worst in 13 quarters. New labor laws delivered the knockout punch via hefty one-time expenses.
Non-bank, non-financial, non-oil & gas revenues marked the first double-digit rise post-March 2023. Operating profits advanced 7.5% YoY, topping sequential gains. But bottom-line reality bit hard, echoing the negativity last seen in September 2022.
Culprit? November’s labor code rollout, mandating 50% CTC as basic pay and expanded gratuity setups. Tech heavyweights—TCS, Infosys, HCL—shouldered ₹4,373+ crore in hits, projecting 13% sector-wide profit erosion. Aggregate post-tax impact: about 5%.
Reforms target wages, safety, and social security, promising long-term equity but short-term pain. Positively, Q-o-Q revenue acceleration to 20% (from 16%) rode GST relief waves.
Market watchers note this as a transitory blip, with core operations strengthening. Still, it exposes how policy pivots can jolt earnings cycles, prompting caution among fund managers.
As FY25 progresses, the focus shifts to how swiftly firms adapt, potentially setting the stage for a rebound if macroeconomic tailwinds persist.