Business

India’s corporate earnings are faring better than investors feared

The feeling of fear that gripped investors ahead of the June quarter income seems unfounded as the performance of Indian companies, so far, showing.

The April-June period saw Nifty lost almost 10 percent of its value as a weak macroeconomic background led by soaring input costs to make investors afraid of sharp declines in profitability and decreased ranking to estimated income for 2022-23.

A glimpse of the revenue of the NIFTY50 company that has announced the results of the June quarter they show that investor fears may be excessive even though the results have not been spectacular.

“The results are much better than people think. Except for commodity companies, there is no too much impact on margin … The company has been able to continue the cost, “said a fund manager based in Mumbai on anonymity conditions.

In terms of beats and mistakes, this is a mixed bag but optimism will feel relieved to see that companies with estimated beating revenues have not fallen from the cliff from the previous quarter when more than half a good company defeated the expectations of analysts.

Of the 31 companies part of the NIFTY50 index which announced their income on July 29, 14 successfully defeated the Bloomberg consensus estimation of their net profit, while 14 failed to meet the consensus views.

Leader and slow

The sector with most of the estimated income beating is financial services, with ICICI Bank, Axis Bank, Bajaj Finance and HDFC Bank noted higher profits than the expected road.

However, the Information Technology Company (IT) saw the highest “error” amount in the June quarter led by Infosys, HCL Tata and Technology Consultation Services.

High wage costs and cross -border winds see the profit of the sector knocking in the June quarter.

“Management comments [Technology] at 1QFY23 have changed carefully, recognizing the sacred wind of the ongoing macroeconomic challenges, the disruption of the supply side due to geopolitical tensions and the problem of the supply side,” Nomura Financial Advisory and Indian Securities said in a note.

An income surprise package, so far, is Tata Steel. The company is expected to report weak income due to the government’s steps to curb exports and decline in global steel prices. However, the Tata Group company managed to beat the estimated Street driven by the European steel business.

What’s in front?

If the resilience of a good company continues when the revenue season ends in two weeks, the money manager believes it can trigger optimism among investors for the rest of this year.

The benchmark index has jumped by almost 10 percent in the past month and is on the verge of loss to the calendar year.

According to a recent MoneyControl survey, the majority of Dana managers expect company revenues to grow by 10-15 percent in 2022-23 and they also expect the second half of 2022 to be positive.

“We believe that Q2 will be similar to Q1, however, the second half results must be far better than the first half of FY23,” said Arpit Shah, Director and Manager together at the maintenance portfolio manager.