Why will Q4 results 2025 be better than Q3FY25 earnings? EXPLAINED with five crucial reasons

Q4 results in 2025: After the global stock market crash during weekend sessions, Indian stock market investors eagerly await the beginning of the Q4 results for the 2025 season next week. After the disappointing Q3FY25 earnings, the Indian stock market is estimating that upcoming Q4FY25 results would have something to cheer for Dalal Street investors as they believe that Q4 results 2025 would be better than the Q3 results 2024. They said that the banking segment is expected to beat the market estimates, while other segments may look at provisioning as a weapon to counter Donald Trump's tariff tailwinds.

Expecting better Q4 results 2025 after a disappointing Q3FY25 results season, Sandeep Pandey, Founder of Basav Capital, said, "Upcoming Q4 results 2025 would be a better one as the banking segment is expected to deliver strong earnings. This means demand for the Indian banks has sustained, which would trickle down to other industries. However, this may not figure in the balance sheets of other banks as provisionings are expected to put pressure on the balance sheets of Indian companies. This rise in provision is anticipated due to the rising concerns about Trump's tariff.

Top 5 reasons for better Q4FY25 results

Speaking on why Q4 results 2025 would be better than Q3FY25 earnings season, Swapnil Aggarwal, Director at VSRK Capital, listed out the following five crucial reasons:

1] Year-end consumption pickup: Q4 generally experiences a pickup in consumption, particularly in consumer durables, autos, and FMCG segments. Better consumer sentiment and corporate outlays in the latter part of the financial year usually drive higher revenues and margins. The seasonal pickup in demand places Q4 ahead of Q3, which typically experiences more restrained consumption trends.

2] Increase in government spending: As the financial year ends, government expenditures and infrastructure project implementation tend to increase. This pickup favourably impacts construction, capital goods, and public sector services. Firms directly or indirectly associated with government spending tend to exhibit better top-line and bottom-line performance in Q4 versus Q3.

3] Inventory liquidation and volume gains: Distribution and retail channels usually experience an increase in sales volume during Q4, courtesy of year-end goals and liquidation attempts for inventory. This results in improved operating leverage, increased turnover in inventory, and enhanced recognition of revenue. On the contrary, Q3 usually experiences wary movement of inventory post-festival season, with consequent relatively subdued performance.

4] Decline in input costs: By Q3, commodity and energy prices worldwide had stabilized or come down. This effect is seen in Q4, as sectors such as manufacturing, auto, and FMCG enjoy lower raw material and logistics costs. This means improved margins and enhanced overall profitability compared to Q3, which suffered due to increased input costs.

5] Tax adjustments and optimization: Q4 is also when businesses prioritize getting their finances to where they can by tweaking tax payments, delaying revenue recognition, and grabbing tax credits. These tactics aim to report more solid year-end balance sheets, generally causing a one-time jump to net income that otherwise wouldn't be present in Q3.

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