Profits Are Just Half The Story This Earnings Season

The festive shopping season began more subdued than expected in 2026, yet certain innovative tech firms managed to generate and enhance profits, and increase their revenue during the pre-festive quarter of the fiscal year 27 (Q2 FY27). When we examine the financial performance of ecommerce, fintech, and logistics enterprises, it becomes evident that these businesses entered this period with greater confidence and managed to mitigate some of the challenges they faced. Almost all of them showcased improved profitability metrics and top-line growth.

According to Inc42's October report, early data from the festive season sales indicated that Indian consumers continued their shopping habits but with increased enthusiasm. However, online sales declined compared to the previous year, card spending and smartphone sales also saw a dip. Surveys suggest that urban households are tightening their discretionary budgets as well, due to rising living expenses, job and income uncertainties, and discounts that no longer seem enticing.

Shoppers are still browsing for products but are less inclined to make significant purchases, as conversion rates for premium items have fallen.

Various macroeconomic factors, such as rising energy prices, logistics costs, and lingering geopolitical concerns, have dampened consumer confidence and spending. Logistics tech companies took advantage of the increased demand heading into the festive season by expanding their capacity. Ecommerce businesses capitalized on seasonal demand, despite the need to balance growth with profitability.

Meanwhile, fintech companies, especially those with a significant UPI focus, faced a different scenario: the potential implementation of merchant discount rates (MDR) on certain UPI transactions. Although MDR has not yet been introduced, the fintech ecosystem witnessed a surge in top-line growth, which is a positive indicator for the subsequent quarter when MDR may become a significant factor.

Nine of the eleven large tech companies involved in these key sectors reported net profits in Q2 FY27. The combined bottom line of these companies expanded by approximately ₹1,100–1,400 Cr year-over-year (YoY), depending on how one treats exceptional items in the base quarter. Notably, EBITDA grew faster than revenue at all nine profitable companies, indicating that operating leverage is beginning to manifest in the reported performance.

However, a considerable profit pool remained concentrated in a few companies, while others like Swiggy and Meesho continued to report losses despite improving operational metrics. Atul Thakkar, executive director at Anand Rathi Investment Banking, believes that the market will increasingly reward earnings delivery rather than growth narratives over the next 12–18 months.