"The earnings growth in June 2022 quarter has been subdued and led solely by BFSI, which has driven 124% of incremental YoY earnings growth so far, aided by credit cost moderation," said Gautam Duggad, head of research, Motilal Oswal Financial Services. "Oil & gas and automobiles have been the laggards while metals and cement sectors posted weak numbers expectedly."
Profits of the 31 Nifty companies including banks and financials that have declared results so far rose 12% year-on-year, driven mainly by the banking and financial sector. In the past few quarters, profit growth has been in the range of 12-20%. However, in the ongoing season, the number of downside surprises in earnings have outnumbered upside surprises.
With softening of global commodity prices, signs of recovery in corporate capex cycle, relatively resilient domestic demand, and companies' focus on profitability, analysts expect earnings to improve in FY23 and FY24.
"From a longer-term perspective, however, we remain confident of 14-18% annualised earnings growth for Nifty 50 companies," said Hajra
Among the Nifty stocks, Bajaj Auto, Axis Bank, ICICI Bank, IndusInd Bank, Bajaj Finance, UltraTech Cement, Asian Paints, Cipla, Sun Pharma, and Tata Steel exceeded analysts' profit estimates; while Maruti Suzuki, Tata Motors, HDFC, Shree Cement, Nestle, Dr Reddy's Labs, JSW Steel, Reliance Industries, Infosys, TCS, Tech Mahindra and Wipro missed profit estimates.
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