Q4 earnings preview: India's top companies may post over 25% growth in net profit

Bluest of bluechip companies which are part of benchmark equity indices -- BSE Sensex and NSE Nifty -- may post over 25 per cent year-on-year (YoY) growth in net profit for the quarter ended March 31, driven by hopes of strong earnings growth in banking and oil and gas sector.

The result season will kick start next week with IT major Tata Consultancy Services (TCS) earnings on April 11. Infosys will announce its results on April 13.

While sharing its projection, brokerage Kotak Institutional Equities said that the net profit of 30-share pack BSE Sensex may grow 26 per cent YoY. On the other hand, the 50-share pack NSE Nifty index is likely to report a growth of 27 per cent for the January-March quarter. It also foresees earnings per share (EPS) of Sensex companies at Rs 2,680 for the financial year 2022-23 and Rs 3,000 for FY24. Likewise, it sees the EPS of Nifty companies at Rs 840 in FY23 and Rs 929 in FY24.

Companies that are a part of Sensex together reported 24.60 per cent YoY growth in the preceding quarter ended December 31 and a 58.40 per cent YoY rise in the corresponding quarter last year.

The quarter gone by witnessed Covid-19 led restrictions in January, high commodity prices and soaring raw material prices. Amid the war between Russia and Ukraine, Brent crude oil hit a high of over $120 in March.

Excluding banks and oil, gas and consumable fuels sectors, Kotak expects negative-to-single-digit YoY net profit growth for automobiles due to production issues and raw material headwinds. It also expects tepid earnings for construction materials (due to weak demand environment, higher fuel and power costs), consumer staples, metals & mining and pharmaceuticals sectors.

Motilal Oswal Financial Services said, “Our banking coverage universe to deliver 7 per cent and 52 per cent pre-provision operating profit and profit after tax growth in 4QFY22, respectively.”

Commenting on the information technology sector, ICICI Securities added that the growth of domestic IT companies is expected to moderate in Q4FY22 as witnessed in Q4 quarters historically.  

“Margins are expected to take a hit due to continued higher employee expenses. The demand environment continued to be strong led by continued deal momentum led by sectors like BFSI and insurance. There would be some cross-currency headwinds during the quarter, which will dampen dollar revenues, to some extent, for the quarter,” the brokerage said.