A recent report by the market daily Business Standard noted that the early bird results for Q3FY23 hint at a further slowdown in corporate earnings and revenue growth.
As per the report, the combined net profit of 225 early bird companies across sectors was up 2.5 percent year-on-year (YoY) in the third quarter of 2022-23, the lowest increase in 10 quarters. Their combined net sales in the previous October-December quarter were up 18.2 percent — the most sluggish growth in seven quarters, it added.
The firms in Business Standard’s sample reported a combined net profit of ₹90,293 crore in Q3FY23, up from ₹88,124 crore a year ago and ₹80,161 crore in the previous quarter.
The combined net profit of BFSI companies in the early bird sample was up 25.6 percent YoY —much better than the rest of India Inc but the smallest increase in five quarters. These companies reported a combined net profit of ₹35,595 crore in Q3FY23, up from ₹28,429 crore a year ago and ₹31,618 crore in Q2FY23, it informed.
However, the performance of non-BFSI companies was relatively muted. Their combined net profit was down 8.5 percent YoY in Q3, the second consecutive quarter of a decline in earnings, said BS. These companies’ net sales were up 16.1 percent YoY — the slowest growth in the past seven quarters.
Non-BFSI firms reported a net profit of ₹54,698 crore in the December quarter, down from ₹58,783 crore a year ago but up from ₹48,498 crore a quarter ago.
“The post-pandemic surge in corporate revenues and profits was episodic and driven by unprecedented fiscal and monetary stimulus by major economies. This tailwind has now ended and the macroeconomic environment has worsened, adversely affecting the corporate sector,” said Dhananjay Sinha, director and head of research and strategy, Systematix Institutional Equity.
He expects a further moderation in corporate revenue growth in Q4FY23 due to a slowdown in domestic and external demand.
On a brighter note, these early bird results suggest a moderation in input costs and a rise in the operating margin. The Ebitda margin for ex-BFSI firms improved to 19.4 percent of total income in Q3FY23, from a five-year low of 17.4 percent in Q2FY23.