Led by a sharp rise in the earnings of banks, the 50 companies comprising the Nifty are expected to report 10.5 percent year-on-year (YoY) growth in their combined earnings during the October-December quarter (Q3FY23) as against just a 1.7 percent increase in the second quarter, a report by Business Standard stated.
Brokerages, however, expect a tepid quarter for non-financial companies. The combined net profits of the index companies excluding banks, financial services, and insurance (BFSI) are expected to grow just 2 percent YoY in Q3FY23, an improvement from the 12.7 percent YoY decline in Q2FY23 but lower than the 27.6 percent YoY growth in Q3FY22, noted the BS report.
According to various brokerages, the Nifty companies are expected to report combined net profits of ₹1.62 lakh crore in Q3FY23, up from ₹1.47 lakh crore in Q3FY22 and ₹1.5 lakh crore in Q2FY23, informed BS. In comparison, the 39 non-BFSI companies are expected to report combined net profits of ₹1.11 lakh crore in Q3FY23, up from ₹1.09 lakh crore in Q3FY22 and ₹95,000 crore in Q2FY23, it added.
The report further pointed out that many brokerages see a further slowdown in corporate revenue growth in the third quarter. The Nifty 50 companies’ combined net sales are expected to grow 15.9 percent YoY to ₹12.96 lakh crore in Q3FY23 from ₹11.18 lakh crore a year ago, it said.
This will be the lowest top-line growth rate for the index companies in the last two years, noted the report. In comparison, the combined net sales of 30 non-BFSI companies in the index are expected to grow 15.6 percent YoY, down sharply from 30.3 percent in Q2FY23 and 28 percent in Q3FY22, it added.
The non-BFSI companies’ top-line growth in Q3FY23 is expected to be the lowest since the Q4FY21 quarter, informed BS.
According to PhillipCapital, the highest earnings growth (Y-o-Y) is estimated for banks, NBFCs, automobiles and capital goods firms, and buoyant growth is expected in FMCG, IT, and infrastructure. In comparison, the brokerage expects an earnings contraction in metals, cement, pharmaceuticals, logistics, and specialty chemicals.