Indian listed companies reported healthy profitability in fourth quarter of last financial year despite challenging global macro backdrop, brokerage firm Motilal Oswal said in its India Strategy report. The companies tracked by Motilal Oswal reported highest earnings growth in the last four quarters driven by strong performance by financials and autos while metals dragged aggregate profitability, the report said.
The companies under Motilal Oswal’s Universe delivered sales growth of 24 per cent, EBITDA growth of 4 per cent and net profit growth of 4 per cent year-on-year (YoY) in FY23.
“While Auto and BFSI were the key growth drivers with 127 per cent and 64 per cent YoY earnings growth, the global commodities such as metals and oil and gas were the prime drag with 46 per cent and 20 per cent YoY earnings decline, respectively. Private Banks added 122 per cent, public sector banks added 115 per cent and autos added 70 per cent to incremental profits, whereas Metals, Oil & Gas and Cement accounted for 232 per cent, 107 per cent and 15 per cent respectively to incremental earnings in FY23,” Motilal Oswal said in its report.
India Inc Q4: Key sectoral highlights
Technology: IT companies reported a mixed performance overall in last quarter of previous financial year, with tier-1 firms delivering muted revenue growth and modest margins, while tier-2 companies outpaced the tier-1 pack with stronger revenue growth.
Banks: Banking sector reported a strong last quarter of financial year 2022-23, driven by healthy loan growth, stable margins, and continued asset quality improvements. There were numerous drivers of credit expansion, with the retail and MSME sectors exhibiting robust growth and the corporate book displaying a healthy rebound.
Automobiles: Volumes grew YoY across segments, except two wheelers that remained flat due to a decline in exports.
Performance highlights for Nifty constituents
- Sales of Nifty 50 companies grew at 13 per cent, EBITDA or operating profit advanced 12 per cent, profit before tax rose 13 per cent and profit after tax climbed 16 per cent in fourth quarter of previous financial year, Motilal Oswal noted
- Among Nifty constituents, 42 per cent companies reported better than expected net profit while 26 per cent missed expectations.
- Excluding Financials, profit for Nifty constituents rose 7 per cent YoY (est. 7 per cent growth)
- SBI, Tata Motors, BPCL, Reliance Industries, Axis Bank, ITC, HDFC, JSW Steel, Kotak Mahindra Bank, Bharti Airtel, Mahindra & Mahindra, Bajaj Auto, Asian Paints, Eicher Motors, Hero Motocorp, SBI Life, Nestle, and Britannia reported higher-than-estimated earnings.
- While ONGC, Infosys, Coal India, Maruti Suzuki, Bajaj Finserv, Tata Steel, UPL, Dr Reddy’s Labs, Cipla, HDFC Life, Tata Consumer, Grasim Industries, and Apollo Hospitals missed Motilal Oswal’s profit estimates estimates.
Eight Nifty companies saw an upgrade of over 5 per cent in their FY24 EPS estimates; while ten witnessed a downgrade of over 5 per cent, according to Motilal Oswal