Although consumer demand is understood to have faded somewhat post the festive season, the macro environment in Q4FY23 has been reasonably good. The robust GST collections in FY23 with the March mop up coming in at Rs 1.6 trillion are a sign that India Inc is doing well even of some of this can be attributed to high inflation. The PMI for both manufacturing and services has held up although the latter slowed in March. But the recovery is clearly picking up steam going by strong air traffic numbers, hotel occupancies and demand for power. Moreover, credit flows have risen by about 16-17% y-o-y suggesting demand from consumers for homes and from businesses for working capital is buoyant.
Profits of banks, which have registered strong loan growth and will continue to provide much smaller sums for loan losses, will be exceptionally good and lead the earnings growth in Q3. Pre-provisioning profits for front-line lenders could jump by more than 22% y-o-y. Sales of automobiles in the home market have been reasonably good in the March quarter especially of passenger vehicles though exports of 2-wheelers have been weak. Some of the demand in the commercial vehicles segment has been driven by pre-buying ahead of the transition to BSVI Phase II.
On the other hand, earnings of metals producers, whose realisations have been weaker, will drag down the aggregate numbers. With rural demand yet subdued, makers of consumer staples are tipped to report mediocre numbers, much of it driven by price hikes rather than volumes. Results from most manufacturers of consumer durables too are likely to be lacklustre amid muted demand and pricing pressure. KIE expects the net profits for the portfolio of companies that it tracks to increase by just 6.5% y-o-y and 17% q-o-q.
Source: https://www.financialexpress.com/industry/q4-likely-to-be-modest-for-india-inc/3040030/
