Nifty 50 cos may post 21% growth in June quarter earnings on low base

Mumbai: Nifty 50 companies are likely to report year-on-year (YoY) growth of 32% and 21% in revenues and profits, respectively, in the June 2022 quarter (Q1) on the back of a low base, according to analysts' estimates. Excluding financial, telecom and commodities, the revenue and profit growth will likely come in at 22% and 16%, respectively.

Auto, energy, cement and consumption sectors will lead the growth in revenues in June quarter, while healthcare, utilities, and banks are likely to be the laggards, according to data compiled by Antique Stock Broking.

Cost pressures are likely to be seen across the board, leading to a margin decline of about 110 basis points. One basis point is 0.01%. Analysts believe the earnings outlook for the current financial year may get revised marginally lower during the quarter because of macro challenges.

"Key macro trends impacting June quarter earnings are real GDP growth of 16.2% due to low base and 7.5% inflation," said Dhirendra Tiwari, head of research, Antique Stock Broking. "Export-linked sectors to benefit from 4.7% YoY rupee depreciation while non-ferrous metal and upstream energy companies to benefit from rising commodity prices. However, corporate margins are likely to suffer due to aforementioned reasons, despite higher operating leverage."

IT Services companies, which have been facing wage hikes and supply-side pressure, are likely to report modest median revenue growth of 14% YoY in and 3.3% sequentially in the quarter, according to Motilal Oswal Financial Services.

On pharma front, Nirmal Bang expects most names to deliver a subdued performance in the domestic market on a YoY basis, but those with a larger chronic presence, like JB Chemicals, Sun Pharma and Lupin, should be relatively much better off.

Consumer electronic companies are expected to report revenue and earnings growth of 64% and 98%, respectively, with a low base and past three-years' CAGR of 10% and 12%, according to PhillipCapital.

Fast-moving consumer goods companies, which have been impacted due to rising inflation, are expected to post revenue and profit growth of 18% on the back of low base and price hikes. Makers of consumer durables could also report strong revenue growth due to low base coupled with strong RAC demand because of intense summer and pent-up demand, said a note by Antique Broking.

Auto companies, which have seen chip shortage and decline in commercial vehicles volumes, are likely to see 1% sequential decline in revenues, as per Kotak Securities' forecast.