India Inc s revenue growth in Q2 has been the weakest in nine quarters, rising by 6.2%, according to a sample of 3,901 companies. Net profit on the other hand rose by 39%, the highest in six quarters, helped by easing input costs. The banking, financial services, and insurance (BFSI) sector supported aggregate earnings. Excluding banking and finance firms, revenue and net profit growth slowed to 2.3% and 33.6% respectively.
For market players who were betting on the RBI to cut rates shortly, the latest inflation reading should give reason for pause. The spike in inflation was led by food items, and therein lies the problem.
Revenue growth is also likely to remain in double digits, albeit slower, given the high base effect of the previous year s June quarter. In addition, benign input costs will continue to support operating profitability.
The Nifty 50 companies are expected to report robust year-on-year, double-digit earnings growth for the June quarter, helped by the stellar performance of select firms from sectors such as automobiles, banking and finance, and oil and gas.
Despite profits rising in value terms, profit to GDP ratio of Nifty 500 companies dipped to 4.1 percent in FY23, while that of listed companies fell to 4.3 percent after hitting a record high in the previous fiscal. This was mostly dragged by global commodity prices