Four times a year, misread four times a year

Listed companies in India publish results every quarter, within 45 days of the quarter’s end (60 for the fourth). That’s the good news: you don’t wait a year to learn how the business is doing. The bad news is that a quarter is a short, noisy, seasonal slice of a year, and most of what gets said about quarterly results on the day they land is a misreading of one kind or another.

This post uses Desi Bites Foods’ first two quarters as a listed company — Q1 and Q2 of FY26 (April to September 2025) — to show the three comparisons that matter, the one trap that catches everyone, and why the honest answer to “how was the quarter?” is usually “ask me in three more.”

First, the shape of the year

Every business has a rhythm. Snacks sell most during Q3 (October to December: Diwali, the wedding season, winter snacking). Desi Bites’ FY25 revenue of ₹2592 lakh didn’t arrive in four equal pieces:

FY25 Q1 (Apr–Jun) Q2 (Jul–Sep) Q3 (Oct–Dec) Q4 (Jan–Mar) Year
Revenue (₹ lakh) 570.2 622.1 777.6 622.1 2,592
Share of year 22% 24% 30% 24% 100%
EBITDA (₹ lakh) 88.4 102.6 147.7 102.6 441
EBITDA margin 15.5% 16.5% 19.0% 16.5% 17.0%

Two things about that table before any comparison is made.

The festive quarter carries 30% of the year’s revenue and a visibly higher margin. That margin isn’t a sign of better management in October; it’s operating leverage — the factory, the sales force and the rent cost roughly the same every quarter, so when volumes are 36% higher than Q1, more of each extra rupee falls through to profit.

And every quarter is a bit different from the one before it for reasons that have nothing to do with the business getting better or worse. That is the whole problem with quarterly numbers, and it’s why the choice of comparison matters so much.

The three comparisons

YoY  (year on year)        = this quarter vs the SAME quarter last year
QoQ  (quarter on quarter)  = this quarter vs the PREVIOUS quarter
TTM  (trailing twelve months) = the last four quarters added together

YoY removes seasonality, because Q1 is compared with Q1. It’s the default for a seasonal business and the number the company will lead with when it’s good.

QoQ removes nothing — it compares a lean quarter with a fat one — but it tells you what happened recently, which YoY can’t. A business that grew 20% YoY but fell 10% QoQ against its usual seasonal pattern has a recent problem that the YoY figure is still hiding.

TTM smooths all of it into a rolling year, and is the right denominator for any ratio that needs a full year — P/E on a quarter’s earnings times four is a guess; on trailing twelve months it’s a number.

Desi Bites, Q1 and Q2 FY26

  Q1 FY26 Q2 FY26
Revenue (₹ lakh) 673.0 734.2
YoY growth +18.0% +18.0%
QoQ growth +8.2% (vs Q4 FY25) +9.1% (vs Q1 FY26)
EBITDA (₹ lakh) 105.7 122.6
EBITDA margin 15.7% 16.7%
EBITDA YoY +19.6% +19.5%

Read the YoY row and the story is simple and consistent: the existing business is growing at about 18% a year, with margins a touch better than the same quarters last year. That is, as it happens, exactly the FY26 growth the DCF assumed — two quarters in, the forecast is on track.

Now read the QoQ row and notice how little it tells you on its own. Q1 was up 8.2% on Q4; Q2 up 9.1% on Q1. Is that good? You can’t know without the seasonal template: Q1 is normally the leanest quarter, carrying 22% of the year against Q4’s 24%, so revenue rising from Q4 into Q1 is genuinely strong — it means the underlying growth outran the seasonal dip. QoQ is only readable against the seasonal template.

The trap

Here’s the comparison a headline writer in a hurry makes:

Desi Bites’ Q1 FY26 revenue of ₹673 lakh is 13.5% below its Q3 FY25 figure of ₹777.6 lakh.

Every word of that is accurate. It’s also meaningless: it compares the leanest quarter of the year with the festive one. A business growing 18% a year will show a double-digit fall from Q3 to Q1, every year, forever. Anyone who sells on that number has confused a calendar with a trend.

The reverse trap exists too. A company whose Q3 is up 40% on Q2 is usually just a company with a festive season. Growth is measured against the same quarter a year ago, or not at all.

🧒 Explain it like I'm 10 (optional — skip if this is already clear)

An ice-cream shop sells a lot in May and very little in December. If the owner says “December sales crashed 70% compared with May,” nobody’s worried. Of course they did. It’s December.

The useful question is: “How did this December compare with last December?” If it’s up, the shop is doing better. That’s year-on-year.

“How did December compare with November?” tells you if something changed just now — but only if you already know that December is normally a bit lower than November anyway.

TTM: turning quarters back into a year

After Q2 FY26, the last four quarters are Q3 FY25, Q4 FY25, Q1 FY26 and Q2 FY26:

Trailing twelve months to 30 September 2025 ₹ lakh
Revenue 2,806.9
EBITDA 478.6
Revenue vs full-year FY25 +8.3%

Careful with that +8.3%, though — it isn’t a growth rate. The TTM and FY25 share two quarters (Q3 and Q4 FY25), so only half of each total has changed, and the comparison mechanically shows about half the real growth: the two new quarters grew 18% YoY, the two shared ones by definition 0%. TTM growth means something only against the previous TTM, the twelve months to 30 September 2024.

Where TTM earns its place is as a level. It has two new quarters in it and two old ones, so it moves slowly and is never seasonal, which makes it the right figure for ratios like P/E. When you see a P/E quoted mid-year, ask whether the E is last financial year’s, this year’s annualised quarter, or TTM. They can differ by a lot, and only the last is both current and complete.

What one quarter can tell you

Not nothing. A quarter is where you first see:

  • A change in direction. If Q2 YoY growth had been 6% after five quarters of 18%, that’s information — not proof, but the first data point of a trend, and worth watching for in Q3.
  • Margin pressure. Input costs (edible oil, flour) move faster than quarterly prices. Gross margin down 200 basis points in a quarter, with the MD&A citing raw material, is the kind of thing that shows up quarterly and resolves — or doesn’t — over the next two.
  • A one-off. Exceptional items, a fire, a plant shutdown. Quarterly results are where you learn it happened; the annual report is where you learn what it cost.
  • Acquisitions changing the base. Desi Bites bought a regional brand on 1 October 2025. From Q3 FY26 onwards, its reported revenue includes the acquired sales (₹130 lakh in Q3, ₹110 lakh in Q4). YoY growth from Q3 will look spectacular and will be partly bought. No Indian rule requires a separate organic growth line, though many companies offer one. Ind AS 103 does require the annual accounts to disclose the acquired business’s revenue and profit since the deal; use that to compute it.

What a quarter can’t tell you is whether any of the above is a trend. Three quarters can start to. Twelve can.

Common mistakes

  • Comparing a quarter with the previous quarter in a seasonal business. Use YoY. Use QoQ only against the seasonal template.
  • Annualising one quarter. Q3 times four overstates a snacks company’s year by roughly 20%; Q1 times four understates it. Use TTM.
  • Reading “record quarter” as news. A growing seasonal business sets a record every Q3. The question is the YoY rate, not the level.
  • Missing the base change after an acquisition. Reported growth and organic growth diverge from the first post-deal quarter. Find the organic number or work it out.
  • Treating the quarter’s margin as the business’s margin. Q3 margins are higher than Q1 margins for reasons of volume, not competence. Compare margins YoY, or annually.
  • Reacting on the day. Results land, the stock moves, the commentary follows the stock. None of that is analysis. The number you need is the one that will be visible in three quarters’ time.

Takeaway: A quarter is a short, seasonal, noisy slice of a year. Compare it with the same quarter last year (YoY), read quarter-on-quarter only against the seasonal pattern, and use the trailing twelve months for anything that needs a full year. Desi Bites’ Q1 FY26 was 13.5% below its festive Q3 and 18% above last year’s Q1 — and only one of those numbers means anything.