News Update

India Inc. Poised for Earnings Rebound in Q1 2022–2023, Led by Automobile, FMCG, and BFSI Sectors, Say Brokers

• ByStartupStory     |    April 11, 2023

Brokers anticipate India Inc. to report an increase in earnings for the March quarter of 2022–2023 following two quarters of relatively subdued performance. Automobile manufacturers, FMCG businesses, and banking, financial services, and insurance (BFSI) companies are anticipated to lead this growth.

In Q4FY23, it is anticipated that the combined net profit of the Nifty50 companies—excluding Adani Enterprises—will have increased 15.6% to Rs 1.77 trillion from Rs 1.53 trillion in Q4FY22. In Q3FY23 and Q2FY23, respectively, the combined net profit of the index companies increased by 9.3% and 1.4% YoY.

Brokerages anticipate, however, that companies will report a further slowdown in revenue growth as a result of weak overall demand and a drop in commodity prices, which negatively impacts price realizations for companies in the mining and metals sector as well as the oil and gas sector.

These Nifty50 companies could report a 12.5% YoY increase in net sales (or net interest income in the case of lenders) to Rs 13.69 trillion in Q4FY23 compared to Rs 12.17 trillion in Q4FY22.

According to earnings estimates, brokerages are placing their bets on manufacturers’ margin expansion in the fourth quarter of FY23 to more than offset the slowdown in revenue growth despite falling commodity and energy prices. Like they did in the first nine months of FY23, the Street anticipates that banking and non-banking lenders will continue to produce strong growth in top line and net profit in the fourth quarter.

Brokerages predict that the combined net profit of the 11 BFSI companies that make up the Nifty50 will have increased by 32.3% to Rs 56,824 crore in Q4FY23 from Rs 42,939 crore a year earlier; their net interest income will have increased by 29.4% YoY to Rs 1.82 trillion in Q4FY23 from Rs 1.2 trillion.

BFSI firms will likely contribute 58% of the additional growth in corporate earnings in Q4FY23.

Brokerages estimate that the combined net profit of the remaining index companies, excluding BFSI firms, increased by 9.1% to approximately Rs 1.2 trillion from Rs 1.1 trillion from January to March 2022.

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