The BSE set of companies is estimated to report an 18% year-on-year rise in net profits for Q1FY24 and a fall of 8% sequentially, according to Kotak Institutional Equities
India Inc is expected to report strong profits for the June quarter buoyed by good performance from oil marketing companies (OMCs), banks and automobile manufacturers. Amidst easing cost pressures, companies in the consumer space are likely to improve operating margins.
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Even excluding OMCs, the Q1FY24 results, when compared with those a year ago, should be reasonably good, analysts said. However, seen sequentially, the performance may disappoint as demand for some goods and services has been muted. In particular, producers of metals would likely report a sharp fall in profits for the quarter as realisations have weakened.
The BSE set of companies is estimated to report an 18% year-on-year rise in net profits for Q1FY24 and a fall of 8% sequentially, according to Kotak Institutional Equities. The 50 Nifty firms are expected to report a smarter 25% y-o-y increase in net profits but a decline of 8% over the March quarter.
Ahead of the season, brokerage Motilal Oswal has pruned its earnings estimates for the Nifty by 0.8% for FY24 and 0.5% for FY25. It now projects that the Nifty earnings per share will grow by 20% in the current year and by 15% next year. Last year, Nifty earnings grew by about 19%. The Indian economy is poised to slow down this year with gross domestic product growth forecast pegged at around 6-6.5% levels, down from 7.2% last fiscal.]
Revenues for automobile manufacturers are tipped to stay flat sequentially in Q1FY24 as subdued retail demand has left the volumes of passenger vehicles somewhat weak. Volumes for commercial vehicles, too, are estimated to have fallen in the June quarter due to pre-buying in the March quarter ahead of the transition to BS-VI. However, volumes in the two-wheeler and tractors segments have seen a strong sequential rise in the June quarter.
The IT pack will likely post disappointing sequential revenue growth although the June quarter is typically a good one for the sector. Analysts believe the top line growth could be flat for some, grow marginally for others and even decline for companies like Wipro and Tech Mahindra, thanks to subdued spends across verticals such as BFSI and telecom. Moreover, better compensation is expected to have pressured margins by 20-90 basis points unless companies have saved on variable costs.
Headline numbers for most banks will appear remarkable when compared y-o-y, thanks to treasury losses in the base quarter or Q1FY23. But even adjusting for this, the results are expected to be good thanks to strong yields and loan growth, and also a boost to the bottom line from smaller provisioning. At the same time, some pressure on net interest margins could be visible as the cost of funds starts to outweigh the higher interest rate on loans.
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Most makers of consumer staples should report volume increases in mid-single digits since the recovery in rural India has been somewhat slow. The fading away of the impact of price hikes taken in 2022 and price cuts in select categories would weigh on revenues. As for discretionary items, demand has been reasonably good for categories such as jewellery but muted for the QSR space. Almost all manufacturers of capital goods should report good profits as order books have seen a healthy growth in the past five to six quarters and the pace of execution is understood to have been brisk. Top pharmaceuticals are also expected to post healthy profits helped by better prices of generics in the US market and robust demand for branded products.
