Whalesbook
The Mixed Earnings Landscape
State Bank of India (SBI) delivered an exceptional quarter, announcing its highest-ever profit of ₹21,028 crore for Q3 FY26, a 24.5% year-on-year increase. This performance was driven by robust credit demand, healthy deposit mobilization, and a continued improvement in asset quality, evidenced by a Gross NPA ratio of 2.15% and Net NPA of 0.39% [6]. The bank's Net Interest Margin (NIM) stood at a healthy 3.36% [6], though other reports suggest a slight dip to 3.12% in the same quarter [11]. SBI's wealth management arm has set an ambitious target of ₹15 lakh crore in Assets Under Management (AUM) by 2030 [6].
Tata Steel reported a remarkable 723% year-on-year surge in net profit to ₹2,689 crore for Q3 FY26 [5]. This was primarily attributed to strong domestic demand, lower costs, and the benefit of a low base from prior year write-offs in its European operations [5]. The company's domestic operations achieved an EBITDA margin of approximately 23%, with an EBITDA per tonne of ₹12,000, significantly outperforming competitors like JSW Steel and SAIL [5]. However, the company's European business continues to grapple with weak demand and pricing pressures.
### Margin Compression Amidst Revenue Growth
Despite revenue growth, several companies are signaling underlying margin pressures. Sonata Software's net profit fell 13.1% quarter-on-quarter to ₹104 crore, primarily due to incremental past service costs related to new labor codes, even as revenue climbed 45.4% to ₹3,081 crore [Input]. Its EBITDA margin contracted to 6.5% from 8.1% in the prior quarter [Input]. Similarly, Oswal Pumps reported a 14% profit increase to ₹91.5 crore on a 32.2% revenue rise, but its EBITDA margin declined to 25.3% from 31% year-on-year, indicating increased operating costs [Input]. Sarda Energy & Minerals saw a 3.55% dip in net profit to ₹190.4 crore on a 3.3% revenue decline, with EBITDA falling 15.7% [Input].
Strategic Maneuvers and Divestment Progress
Reliance Consumer Products Ltd. (RCPL) marked its first international acquisition by securing a majority stake in Australian beverage company Goodness Group Global, signaling expansion into new consumer markets [Input]. Meanwhile, the strategic disinvestment of IDBI Bank is progressing, with financial bids received from shortlisted bidders and currently under evaluation by the Department of Investment and Public Asset Management (DIPAM) [21, 22]. Fairfax India Holdings is reportedly among the contenders. Kotak Mahindra Bank has clarified it has not submitted a financial bid [2]. The government and LIC aim to sell a combined 60.72% stake, a process that has been in motion since Budget 2020 [22].
In a significant move for public sector finance, Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) boards have approved an in-principle merger, aligning with the Union Budget 2026-27's objective to enhance scale and efficiency in public sector Non-Banking Financial Companies (NBFCs) [4, 10]. PFC, trading at a P/E of 5.48 with a market cap of ₹1.38 lakh crore, and REC, with a P/E of 5.69 and market cap around ₹1 lakh crore, are set to form a formidable infrastructure financing entity [13, 4]. The market reacted with mixed sentiment; PFC shares rose marginally, while REC saw a dip on February 6, 2026, reflecting investor caution on integration [8].
### Regulatory Storm Clouds Gather
Go Digit General Insurance is under scrutiny, having undergone a search by the Directorate General of Goods and Services Tax Intelligence (DGGI) between February 5 and February 6 [Input]. The company disclosed this development to stock exchanges, indicating a probe under the Central Goods and Services Tax Act [Input]. This event highlights increasing regulatory oversight within the financial services sector.
### Sectoral and Macroeconomic Context
The Indian banking sector continues to strengthen its balance sheets, with Gross Non-Performing Asset (GNPA) ratios declining to multi-decade lows. However, NIMs face pressure from rising deposit costs, a trend exacerbated by recent repo rate adjustments by the RBI [15, 9]. Credit growth remains resilient, showing a shift towards corporate lending from a purely retail-driven expansion [18]. The steel sector experienced strong domestic demand but faced pricing challenges in Q3 FY26 [5]. Overall, India's economy is projected for robust growth, driven by consumption and investment, but global trade uncertainties persist [15]. Swiggy's Instamart has begun reinstating handling charges, citing limited adoption of its fee waiver campaign, signaling a retreat from aggressive discounting in the quick commerce space [Input].