Seetharamanomics

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