Results preview: India Inc likely to report highly profitable Q4
The combined net profit of the Nifty50 companies (excluding Adani Enterprises) is expected to have grown 15.6 per cent to Rs 1.77 trillion in Q4FY23, from Rs 1.53 trillion a year ago. The index companies’ combined net profit was up 9.3 per cent year-on-year (YoY) in Q3FY23 and 1.4 per cent YoY in Q2FY23.
Brokerages, however, expect companies to report a further slowdown in revenue growth due to sluggish aggregate demand and a decline in commodity prices, which adversely affects price realisations of firms in the mining & metals and oil & gas space.
These Nifty50 companies may report 12.5 per cent YoY growth in net sales (net interest income in case of lenders) in Q4FY23 to Rs 13.69 trillion in Q4FY23, against Rs 12.17 trillion a year ago.
The combined net profit of 11 BFSI firms that are part of the Nifty50 is expected to have grown 32.3 per cent to Rs 56,824 crore in Q4FY23, from Rs 42,939 crore a year ago; their net interest income, brokerages expect, to have grown 29.4 per cent YoY to Rs 1.82 trillion in Q4FY23, from Rs 1.4 trillion in Q4FY22.
In contrast, the combined net profit of non-BFSI companies had declined on a year-on-year basis in Q2FY23 and Q3FY23. FMCG companies and automakers are likely to be the biggest earnings drivers in the non-BFSI space, followed by IT services exporters, such as Tata Consultancy Services, Infosys, and HCL Technologies.
Estimates are for 49 of the Nifty50 companies, excluding Adani Enterprises, which is not widely tracked by brokerages.
The brokerage expects its universe earnings to rise 15 per cent YoY. For Nifty earnings, the expectation is 14 per cent YoY growth in Q4FY23.
Earnings growth, according to MOSL, would be fuelled by the BFSI and auto sectors, which have likely witnessed a rise 37 per cent and 70 per cent YoY, respectively, and contributed 70 per cent and 20 per cent to incremental YoY earnings for the MOFSL Universe in the March 2023 quarter. The IT services, FMCG (consumer), and oil & gas sectors are expected to post 11 per cent, 10 per cent, and 16 per cent YoY growth in earnings, respectively.
Analysts at Kotak Institutional Equity are relatively conservative in their earnings estimates. “We expect the net income of the KIE universe to increase 6.5 per cent YoY and 17 per cent QoQ in Q4FY23. We expect net income of (1) automobiles (improvement in PV and CV volumes, margin
improvement for OEMs) and (2) banks (strong loan growth, stable NIMs and steady asset quality) to increase sharply YoY, but the net income of metals and mining (lower commodity prices, weak realisations) is likely to decline sharply YoY,” write Sanjeev Prasad, Sunita Baldawa, and Anindya Bhowmik of Kotak Institutional Equity (KIE) in their earnings preview.
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