The aggregate growth in net profit of companies was 18.5% year-on-year (YoY), according to data from Ace Equity. This is taking into consideration 38 companies that have so far reported earnings.
In the September quarter, the aggregate growth in net profit of Nifty 50 companies was 15% and in the June quarter, it was a little over 12%.
Despite being a seasonally weak quarter, the information technology pack reported better-than-expected growth both in the topline and bottomline. Infact, for
, the growth in sales was even better than that in the COVID period when digitalisation was booming worldwide amid social distancing restrictions.
Banks across the pack reported strong numbers backed by robust credit growth and continued improvement in asset quality.
Companies in the automobile, cement, capital goods, fast moving consumer goods, and consumer discretionary sectors got some respite on the cost front as prices of several commodities and other inputs eased in the quarter.
As a result, profitability for most companies improved in the third quarter. The improvement was visible more on a sequential basis.
The aggregate operating profit margin of Nifty 50 companies expanded to 23.9% in the third quarter from 20.7% in the September quarter, and 23.4% a year ago.
While for IT and banks, the sales growth was strong, for select manufacturing sectors, it continued to be more of a price-led growth, as rural markets are yet to see a visible recovery.
Earnings of companies such as
, , (), , , , surprised the Street positively, while that of , Larsen & Toubro, and was a mixed bag.
Stock Talk
While the earnings were better than expected, it did not trigger any major upgrades for companies.
“The results season has seen a meaningful positive surprise factor from IT, banking as well as auto sectors to the extent that earnings have been reported. We expect consumer discretionary names to stay under pressure due to weak demand in entry level categories and rising base metals prices would also act as a margin headwind going ahead,” said Hariharan, head institutional equity sales at Emkay Global Financial Services.
The outlook on growth particularly for FY24 remains murky for the IT sector given the slowdown in the major export markets – US and Europe. A reflection of this is already visible in the massive layoffs being seen across the board.
“Rising caution on FY24 growth outlook and rich valuations compels us to remain selective, with Infosys our preferred pick in the IT pack,” Jefferies India said in its report.
The view on the banking pack remains fairly bullish with analysts betting on both private and public sector stocks.
SBI remains a “buy” for most of the brokerages. According to Trendlyne, the stock has an average target price of Rs 696.85, which represents an upside potential of about 28% from the current price.
Similarly, Axis Bank is a “strong buy” for analysts as most believe that the growth levers for the lender remains intact.
Following the robust earnings reported by Tata Motors, majority of the analysts have a “buy” rating on the stock. According to Trendlyne, the stock has an average target of Rs 520.50, which implies an upside potential of close to 17% from the current levels.
For
, most brokerages have a “buy” rating given the sustained growth in the telecom and retail businesses and improvement in the oil and gas vertical. However, they see new energy and financial services businesses acting as near-term triggers for a re-rating of the stock.
Analysts are bullish on Britannia Industries as they believe management’s initiatives to balance growth and profitability will hold it on the path of sustainable and profitable share gain in the future.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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