Q4 results preview: Top-line, profit of India Inc. may moderate, say experts; domestic cyclical to lead

Tata Consultancy Services (TCS), the country’s largest software services exporter, will kick start the earnings season for the fourth quarter ended March 2024 on April 12.

Experts expect a moderate top-line and profit growth due to the base effect. They also observed that the revenue growth of India Inc. is moderating while falling raw material benefits are already factored in.

Deepak Jasani, Head of Retail Research at HDFC Securities pointed out that in Q4FY24, we have a modest base of topline growth and a normal base of PAT growth. Considering this, a moderate topline and profit growth is expected.

He added that margin tailwinds are likely to reduce due to a high base. In Jasani’s view, auto, cement, retail, capital goods, OMC (oil marketing companies), banks, NBFC, and healthcare may report strong earnings growth driven by volume and operating leverage. On the other hand, IT, chemical, agrochem, FMCG and metals may report moderate or weak earnings.

Read all Q4 results news here

Motilal Oswal Financial Services expects Nifty earnings to grow 6 per cent year-on-year (YoY).

Margin tailwinds are likely to narrow due to a high base. EBITDA margin (ex-Financials) could remain flat for the Nifty at 19.8 per cent (up 10 bps).

“Earnings growth is anticipated to be driven, once again, by domestic cyclicals, such as auto and BFSI, which are expected to post 20 per cent and 15 per cent YoY growth, respectively. Conversely, earnings growth is expected to be weighed down by global cyclical, such as oil and gas and metals, which are anticipated to decline 6 per cent and 12 per cent YoY, respectively,” said Motilal Oswal.

The brokerage firm believes healthcare (+33 per cent) and cement (+32 per cent) may report robust YoY earnings growth. Consumers (+7 per cent), capital goods (+5 per cent), and technology (+4 per cent) may report moderate YoY growth.

“Our FY24 Nifty EPS (earnings per share) remains stable at ₹980, while the FY25 EPS has witnessed a cut of 1 per cent to ₹1,132. We expect the Nifty EPS to grow 21 per cent and 16 per cent in FY24 and FY25, respectively,” said Motilal Oswal.

Kotak Institutional Equities expects Q4FY24 net profits of the BSE-30 index to increase 5 per cent YoY and 8 per cent QoQ and for the Nifty 50 Index to increase 4 per cent YoY and 7 per cent QoQ.

“We estimate EPS of the BSE-30 index at ₹3,121 for FY24 and ₹3,551 for FY25 and of the Nifty-50 index at ₹989 for FY24 and ₹1,088 for FY25,” said Kotak.

Also Read: Q4 results: Largecaps may give some surprises in FY25

Experts believe the banking sector may report mixed numbers amid net interest margin (NIM) pressure, and steady loan growth but softer deposit growth and cost pressures. PSU Banks may report better numbers than private banks.

Also Read: Banking sector Q4 preview: PSU Banks to continue to post better earnings growth than private banks, says Elara

The IT sector which has been struggling in the recent past may report weak numbers for Q4FY24.

The largecap IT services players may report modest revenue growth in Q4FY24 due to persisting muted demand trends due to weak discretionary spending by clients amid an uncertain global macroeconomic situation.

Also Read: Q4 results preview: IT sector likely to report muted revenue growth with stable margins; all eyes on FY25 guidance

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 09 Apr 2024, 08:49 AM IST