Q3 Results Preview: How would Nifty and Sensex companies perform in December quarter? Here’s what analysts expect

Q3 Results Preview: With the third quarter earnings for the financial year 2022-23 (Q3FY23) also set to kick-start from next week, analysts believe the October-December results are likely to be mixed, wherein BFSI (Banking, Financial Services, and Insurance) along with Auto to take lead.

Starting January 9, 2023, information and technology (IT) heavyweights such as Tata Consultancy Services, Infosys, Wipro, and HCL Tech among others scheduled announce their Q3FY23 earnings.

“We expect Q3FY23 net profits of the BSE-30 Index to increase 9 per cent YoY and 6 per cent QoQ and for the Nifty-50 Index to increase 11 per cent YoY and 9 per cent QoQ and estimate ‘EPS’ of the BSE-30 Index at Rs 2,655/ Rs 3,014 for FY23/FY24 and of Nifty Index at Rs798/927 for FY23/FY24," Sanjeev Prasad of Kotak Institutional Equities said in his expectations on December 2022 quarter earnings preview.

Prasad in its preview report expected the net income of automobiles to increase sharply YoY basis on the back of margin expansion of OEMs (Original Equipment Manufacturers) owing to low commodity prices and better product mix offsetting weak volume growth.

Similarly, the net income of banks is also to see a steep rise amid strong loan growth, stable NIMs (net interest margins), and a steady decline in loan-loss provisions to increase sharply on a YoY basis.

On the contrary, the net income of downstream oil companies to decline sharply on a YoY basis amid continued auto fuel under-recovery and metals & mining shall also decline on lower commodity prices, a weak realization on a YoY basis.

While the brokerage expects single-digit YoY growth in net income for capital goods on strong order books, consumer staples on modest volume growth offsetting improvement in gross margin and IT services on muted constant currency terms revenue growth.

In Q3, Nifty50 companies, excluding financial, telecom & commodity, are expected to report revenue/EBITDA/PAT growth of 16/11/12 per cent YoY respectively, Dhirendra Tiwari, Research Analyst at Antique Stock Broking said in its earnings preview report.

Like Kotak Institutional Equities, the analyst at Antique also believes that strong operating earnings growth is likely to be seen in banks helped by strong loan growth, NIM expansion, and lower credit cost and industrials will also report better performance on better execution.

However, de-growth in operating earnings is likely in metals due to lower realization and lag in terms of the full benefit of lower input cost and cement due to higher cost is expected, the analyst added.

According to Tiwari, the key focus would be on management commentary on overall demand and margin trends in the backdrop of elevated inflation, price and interest rate hikes, and slowing global growth. Any commentary around the private capex cycle will also be keenly watched, he added.

“We believe that earnings downgrade is possible during the current earnings season, given the overall weak earnings growth expectation in Q3 and Nifty50 EPS growth expectation stands at 17 per cent YoY,” the Antique Broking analyst noted in a preview report.