Q2 Results: Nifty companies' profit drop in July-Sept quarter as global cyclicals drag – Check sector-wise performance

Nifty companies Q2 results review: Amid higher commodity prices and soaring inflation, the overall profitability of the Nifty companies has been impacted in the second quarter of the financial year 2022-23 (Q2FY23). As of November 1, 2022, 32 companies under the Nifty index had announced their July-September quarter results.

According to brokerage Motilal Oswal, profits of the 32 Nifty companies that declared results so far have dipped by 2 per cent year-on-year. (YoY), led by the global cyclical. Excluding Metals and Oil & Gas, these companies could have posted a solid 25 per cent earnings growth, fuelled by BFSI and Autos.

Moreover, the brokerage said, Nifty companies’ profits would have decreased 14 per cent YoY, excluding BFSI (banking, financial services, and insurance). Along with Metals and O&G, the Cement sector also dragged Q2FY23 earnings, it added.

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The companies that have reported their earnings so far comprise 53 per cent of India's market capitalization, and 79 per cent weightage in the Nifty index, Motilal added.

On the earnings per share front, Motilal said that Nifty EPS for FY23E has increased by 0.5 per cent to Rs 821 from Rs 817 earlier, driven by Axis Bank, Sun Pharma, HCL Tech, and ICICI Bank, besides, FY24E EPS was also raised by 0.4 per cent to Rs 989 from Rs 984 earlier.

Summary of the Q2FY23 performance so far:

1) Technology: Better-than-expected quarter for IT companies despite the challenging macro environment and continued supply headwinds. Tier II companies posted better growth at 3.7 per cent quarter-on-quarter (QoQ) against 1.8 per cent growth for Tier I companies.

2) Banks: Growth momentum has remained strong over Q2FY23 propelled by a pick-up in the corporate segment, primarily working capital loans, while growth in retail, business banking, and the SME (Small-Micro Enterprises) segments continued to remain healthy.

3) Automobiles: The initial flush of results was encouraging from an OEM (Original Equipment Manufacturers) perspective, though Auto Ancillaries’ results were a mixed bag. OEMs’ performance was largely in line/better, driven by strong volume growth, favourable commodity, and currency.

4) Consumer: At a top-line level from a sectoral perspective, what is evident from the results so far is that urban and discretionary demand is holding up well, but rural demand remains weak with no clear recovery in sight over the next few months.

5) Oil & Gas: The sector so far has bagged mixed results with Indraprastha Gas and Mangalore Refinery and Petrochem posting results below estimates. Reliance performed in line as better-than-anticipated performance in Retail segment was offset by relatively weak standalone performance.