Record profits and mechanical selling happening at the same time
As India's fourth-quarter earnings season drew to a close in May 2023, the market found itself holding two truths simultaneously: a cohort of legacy institutions — a coal miner, a biscuit maker, public sector banks — reporting some of the strongest profits in their histories, while foreign capital quietly withdrew from certain corners of the market, compelled not by fear but by the cold arithmetic of index rebalancing. The week's results were less a verdict on the Indian economy than a reminder that markets are shaped as much by methodology and governance as by growth itself.
- Coal India shattered its own profit record with a ₹28,125 crore full-year PAT, even as a weaker final quarter hinted that the peak of its earnings momentum may have passed.
- Britannia and two major public sector banks posted double-digit to triple-digit profit growth, painting a picture of an economy where inflation's worst damage is beginning to heal.
- MSCI's quiet decision to reduce free float weightings in Adani Total Gas and Adani Transmission triggered forced selling by index-tracking funds — a mechanical wave that had nothing to do with the companies' fundamentals.
- Paytm logged its second consecutive operating profit and saw losses narrow sharply, edging toward a free cash flow milestone that would redefine its story from loss-making disruptor to viable business.
- Vedanta's promoter group shed a ₹1,614 crore stake without timely disclosure, surfacing governance questions that cast a shadow over an otherwise buoyant earnings week.
- Aditya Birla Fashion's ₹1,650 crore move to acquire ethnic wear brands W and Aurelia signaled that India's fragmented fashion retail sector is entering a new era of consolidation.
India's fourth-quarter earnings season closed with a split verdict — record profits on one side, foreign selling pressure on the other — and the tension between them would set the tone for the week ahead.
Coal India delivered the headline of the season: a full-year profit after tax of ₹28,125 crore, up 62 percent and an all-time high, driven by higher sales volumes and stronger auction premiums. The final quarter, however, showed an 18 percent dip, suggesting the year's extraordinary momentum had begun to ease. Britannia Industries offered its own strong showing, with quarterly net profit jumping 47 percent as raw material costs softened and gross margins expanded meaningfully. In banking, Union Bank and Bank of India reported surges of 61 percent and 123 percent in quarterly profit respectively — results that pointed to a sector that had found genuine stability.
Paytm added a different kind of optimism to the mix. Revenue grew 51.5 percent, losses narrowed sharply, and the company posted an operating profit for the second quarter running. CEO Vijay Shekhar Sharma spoke of free cash flow positivity as a near-term goal — a threshold that would mark a genuine turning point for the digital payments firm.
Yet the week's undercurrent was one of pressure and concern. MSCI's decision to reduce free float weightings in two Adani Group stocks meant index-tracking funds would be compelled to sell, regardless of any view on the companies themselves — a reminder of how invisible methodological decisions can move billions in capital. Separately, Vedanta's promoter group was found to have reduced its stake by over ₹1,600 crore during the quarter without timely disclosure, raising governance questions that the quarterly filings could no longer conceal.
On a more forward-looking note, Aditya Birla Fashion announced the acquisition of TCNS Clothing — home to ethnic wear brands W and Aurelia — for ₹1,650 crore, signaling that consolidation in India's fragmented fashion retail landscape had begun in earnest. Taken together, the week's events were less a simple story of corporate health than a portrait of a market navigating growth, governance, and the structural forces that shape where capital ultimately flows.
It was earnings season in India, and the results were telling two stories at once. Some of the country's largest companies were posting the kind of numbers that make investors sit up and pay attention—record profits, double-digit growth, expanding margins. At the same time, foreign money was flowing out of certain stocks with enough force to rattle the market. The tension between these two currents would define the week ahead.
Coal India led the charge with numbers that hadn't been seen before. The state-owned miner reported a full-year profit after tax of ₹28,125 crore for the fiscal year ending March 2023, up 62 percent from the previous year. This wasn't just growth—it was a new all-time high, surpassing the previous record set in 2018-19. The company attributed the surge to higher sales volumes and increased premiums from its electronic auctions. In the final quarter alone, however, profit dipped to ₹5,527.62 crore from ₹6,715 crore the year before, a decline of 18 percent, suggesting the momentum had begun to slow as the year wound down.
Britannia Industries, the packaged food giant, reported a 47 percent jump in quarterly net profit to ₹557.60 crore. The company's consolidated sales grew 11 percent to ₹3,892 crore, driven by what management called "significant distribution gains." Raw material costs had softened, allowing gross margins to expand by 688 basis points year-on-year to 44.9 percent. The earnings beat reflected a company that had navigated inflation better than many of its peers.
In the banking sector, the picture was similarly robust. Union Bank of India's profit after tax surged 61 percent year-on-year to ₹2,782 crore in the quarter, with net interest income climbing 18 percent. Bank of India posted even more dramatic results: net profit more than doubled, rising 123 percent to ₹1,350 crore, while net interest income jumped 38 percent to ₹5,493 crore. The bank also declared a 20 percent dividend. These weren't modest improvements—they were the kind of results that suggested the banking sector had found solid footing.
Paytm, the digital payments company, narrowed its losses significantly. The firm reported a 51.5 percent rise in fourth-quarter revenue to ₹23.35 billion, aided by a surge in loan growth. More importantly, it posted an operating profit for the second consecutive quarter. The consolidated net loss shrank to ₹168.4 crore from much larger deficits in prior periods. CEO Vijay Shekhar Sharma signaled ambitions to reach free cash flow positivity in the near term, a milestone that would mark a fundamental shift for the company.
But beneath these strong earnings lay currents of selling pressure. Adani Total Gas and Adani Transmission faced sharp selling from foreign portfolio investors and foreign institutional investors following MSCI's decision to reduce the free float weighting in both stocks. Index funds that track MSCI benchmarks would need to trim their holdings, and that mechanical selling was expected to create significant downward pressure when markets opened. The move highlighted how index methodology changes, invisible to most retail investors, could move billions in capital.
Vedanta Ltd revealed a governance concern that raised eyebrows. A promoter group entity, Vedanta Netherlands Investments BV, had reduced its stake in the company to 0.13 percent from 1.71 percent during the March quarter without promptly disclosing the change to stock exchanges. The overall promoter group stake fell from 69.69 percent to 68.11 percent. The shares that changed hands were worth approximately ₹1,614 crore at current prices, a substantial transaction that had gone unreported until the quarterly filings.
Meanwhile, Aditya Birla Fashion announced it would acquire TCNS Clothing, owner of ethnic wear brands including W and Aurelia, for ₹1,650 crore to acquire a 51 percent stake. The deal, to be followed by a public open offer and merger, represented one of the largest transactions in Indian fashion retail and signaled consolidation in a fragmented sector. As the week unfolded, India's stock market would have to absorb all of this at once: the euphoria of record corporate profits, the mechanical pressure of index rebalancing, and the structural shifts in how capital was being deployed across the economy.
Citações Notáveis
Paytm aims to become free cash flow positive in the near future— Vijay Shekhar Sharma, CEO of Paytm
Coal India's profitability was bolstered by higher volume sales and increased premiums in e-auction— Coal India Ltd statement
A Conversa do Hearth Outra perspectiva sobre a história
Why does MSCI's decision to reduce free float in two Adani stocks matter so much that it would trigger sharp selling?
Because index funds are passive investors. They don't make judgment calls. When MSCI changes the weighting, the funds have to sell automatically to stay aligned with the index. It's not about the company's fundamentals—it's about mechanical rebalancing. Billions follow that signal.
So the earnings season is strong, but foreign money is leaving anyway?
Exactly. You have Coal India hitting all-time profits, banks doubling their earnings, Paytm finally turning profitable. But FPIs are selling Adani stocks because an index told them to. Both things are true at the same time.
What does the Vedanta stake reduction without disclosure tell you?
It suggests someone inside the promoter group needed liquidity badly enough to move ₹1,600 crore worth of shares without waiting for the proper disclosure window. That's either careless or urgent. Either way, it raises questions about how closely these large stakes are being monitored.
Is the Aditya Birla Fashion deal a sign of health or desperation in retail?
It's consolidation. The ethnic wear space is fragmented. ABFRL is saying: we can't compete by staying small. We need scale, we need brands, we need distribution. That's rational strategy, but it also means smaller players are getting swallowed.
If earnings are this strong, why would foreign investors be leaving?
Because earnings strength and capital flows aren't always synchronized. Foreigners might be rotating out of India entirely, or out of specific sectors. Strong earnings don't guarantee inflows—they just mean the companies are doing well. The money moves on its own logic.