Rupee depreciation likely to hurt, September quarter earnings growth momentum may slow down with a few exceptions led by select sectors like consumer and auto
With companies wriggling through a volatile patch, the three months ending September were a litmus test of corporate resilience. Factors like fears of a global recession, inflation, tightening of global monetary policy rates, currency fluctuations and geopolitical crisis threatened to dent the balance sheets of Indian companies in the second quarter of financial year 2023. However, there were a few bright sparks in the period. According to analysts, September quarter earnings growth momentum is likely to slow down, with a few exceptions led by select sectors like consumer and auto. Profitability of companies is expected to be dragged by lower realisation and margin pressure in global commodity driven companies in the metal and oil & gas (O&G) sectors.
Gautam Duggad, head of research, institutional equities, Motilal Oswal Financial Services, expects Nifty earnings to remain flat year-on-year in the July-September period. However, excluding metals and oil & gas, he sees Nifty earnings to see a 30 percent (YoY) growth in the second quarter of FY2023. “Earnings will be led by banking, financial services and insurance (BFSI), consumer and auto while dragged heavily by commodities like metals and oil & gas. Margins are expected to decline 310 basis points (YoY) for our universe excluding oil marketing companies (OMCs). Cement, healthcare, metals and IT will post margin decline while auto will report margin expansion,” he said.