A series of sectoral reports by InCred Equities highlight a mixed earnings season for Q4FY26, with strong performances in financial services and FMCG, while macro risks such as inflation, weak rural demand, and margin pressures continue to weigh on outlook across sectors.

The brokerage noted that India’s corporate landscape is entering a phase where growth remains intact but profitability and valuations face increasing scrutiny, especially amid rising input costs and global uncertainties.

Key Highlights

• InCred Equities flags mixed Q4FY26 earnings, strong BFSI and FMCG performance amid rising inflation risks.
• Bajaj Finance, HUL show resilience while margin pressure, weak demand weigh on broader outlook.

Bajaj Finance Posts Steady Growth

Bajaj Finance reported an in-line Q4FY26 performance with PAT at Rs ​55 billion, supported by robust AUM growth and lower credit costs. However, margins remained under pressure due to a decline in net interest margins (NIM) and higher operating expenses.

Assets under management grew 22% year-on-year to Rs 5.1 trillion, driven by diversified segments such as consumer lending, mortgages, and gold loans. The company expects AUM growth of 22–24% in FY27, with new products and MSME recovery acting as key drivers.

The brokerage maintains a high-conviction ‘ADD’ rating with a target price of Rs 1,200, citing strong cross-sell capabilities and digital efficiency initiatives.

Federal Bank Earnings Supported by Lower Costs

Federal Bank reported Q4FY26 PAT of Rs 12.6 billion, aided by lower credit costs and strong fee income growth. Asset quality improved, with net NPAs declining and provisioning coverage strengthening.

Despite steady performance, the brokerage maintains a ‘HOLD’ rating, citing limited upside at current valuations and concerns over margin sustainability.

HUL Delivers Strong Volume Growth

Hindustan Unilever reported its strongest volume growth in over a year, with Q4 revenue rising 6.8% YoY, led by broad-based demand across segments.

The company implemented selective price hikes of 2–5% to offset input cost inflation while maintaining margin guidance of 22.5–23.5%. Continued focus on premiumisation, distribution expansion, and quick-commerce channels is expected to support growth.

InCred Equities retains an ‘ADD’ rating, highlighting HUL’s resilience amid a mixed demand environment.

Eternal Sees Growth Momentum

Eternal (parent of food delivery and quick commerce businesses) reported mixed quarterly results, with revenue slightly below expectations but improved profitability driven by operational efficiencies.

Eternal reported a mixed Q4FY26 performance, with revenue missing estimates due to seasonality, while profitability beat expectations on the back of operational efficiency and improved margins in quick commerce and Hyperpure. Continued investments in food delivery and quick commerce to drive user growth partially offset gains.

The company expects 20% annual growth in food delivery and over 60% CAGR in quick commerce, supported by expansion in user base and geographic reach. However, rising competition and continued investments in growth remain key concerns for margins. InCred Equities maintained an ‘ADD’ rating with a Rs 383 target price, citing strong long-term growth potential and improving unit economics.

Also Read: InCred Alternatives Tops Rs 4,000 Cr AUM, Closes Rs 1,500 Cr Fund

Inflation risks re-emerge, RBI cautious

Reserve Bank of India has flagged rising inflation risks due to crude oil volatility and potential below-normal monsoon conditions.

According to the report, sectors such as pharmaceuticals and automobiles historically perform better during inflation cycles due to pricing power and inelastic demand. Stocks like Sun Pharmaceutical Industries and Eicher Motors are seen as relatively resilient.

Auto sector faces demand uncertainty

Escorts Kubota has been downgraded to ‘REDUCE’ amid concerns over weak tractor demand due to possible El Niño impact and high base effect. Earnings estimates have been cut, and valuation multiples revised downward.

Outlook

InCred Equities remain selectively positive on companies with strong balance sheets, pricing power, and scalable growth models. However, rising inflation risks, margin pressures, and sector-specific demand challenges warrant a cautious investment approach.