Losses weigh on India Inc Q3 results
India Inc’s aggregate performance in Q3FY22 has been disappointing with revenues growing at just 16.7% year-on-year, the slowest pace in the last four quarters. Moreover, net profits for a sample of 1,685 companies (excluding banks and financials) have fallen by 12% y-o-y thanks to a contraction in operating profit margins of 243 basis points y-o-y and a 24% y-o-y jump in interest costs. Also, more companies have reported losses or a year-on-year drop in profits for the quarter than in December 2021.
Except for banks, IT services and automobiles, corporate earnings growth could remain subdued in FY24 as the economy is poised to decelerate sharply. With a few days to go before the end of earnings season, analysts at Jefferies noted that of the 100 companies they analysed for Q3FY23, 40% had reported numbers that were below estimates. Much like in FY23, earnings growth is expected to be dominated by banks and financials in the coming year too
Goldman Sachs now expects three more Fed rate hikes in 2023
Feb 17 (Reuters) – Goldman Sachs said it now expects the U.S. Federal Reserve to raise interest rates three more times this year, by a quarter of a percentage point each, after data this week pointed to hot inflation and labor market resilience.
Producer prices accelerated in January by the biggest margin in seven months, one report on Thursday showed, while another showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week.
“In light of the stronger growth and firmer inflation news, we are adding a 25bp (basis points) rate hike in June to our Fed forecast, for a peak funds rate of 5.25-5.5%,” economists led by Jan Hatzius said in a note dated Thursday.
Meanwhile, money markets are currently pricing in a terminal rate of 5.3% by July.
A majority of the economists polled by Reuters before the latest data expected the Fed would raise rates at least twice more in coming months, with the risk of going higher still, although none of them expected a rate cut this year.
J.P.Morgan had, before the recent U.S. data, forecast a funds rate of 5.1% by the end of June, while BofA Global Research had forecast a terminal rate in the range of 5.0% to 5.25% by the end of the year.
BofA had also pencilled in two rate hikes of 25 bps each earlier, which is one more than what UBS had estimated.
The European investment bank had said it expects a rate hike in March to mark the end of the current hiking cycle and estimated the policy target would be 4.75%-5% by end-2023.