The third quarter earnings season will kick off on Monday with brokerages projecting a mixed performance by corporate India.
While banks, automobiles, and cement are expected to do well, tech, metals, downstream oil companies and telecom will show muted to modest performance in the quarter.
Tata Consultancy Services (TCS) will report its numbers for the third quarter ended December 31, 2022, on Monday, a seasonally weak period for the tech companies.
Analysts expect a more subdued quarter than last year because of extended furloughs and the growth momentum taking a hit as US and Europe feel the pinch of aggressive interest rate hikes.
The focus will be on the commentary from companies on the number of deals, enterprise spending and how specific verticals will perform.
Brokerages expect TCS will post a net profit growth of 10-16 per cent in the third quarter, while revenues in rupee terms could rise 15-18 per cent.
"We expect revenue growth momentum to moderate in the third quarter on account of furloughs, lower number of working days, deferred spending by few clients and increased cautiousness among clients amid macro uncertainties and high inflationary environment,” analysts at brokerage Emkay said.
The brokerage expects 0.8- 3.7 per cent growth in constant currency for the larger tech companies under its coverage and -04-3.4 per cent growth for the mid-cap entities.
The seasonality in the second half growth will be amplified by slower decision-making and weak discretionary spending because of macro uncertainties, Emkay said.
While rival Infosys is widely expected to retain its revenue guidance of 15-16 per cent for the year, the Bangalore-based company is projected to report a 14 per cent growth in net profit and over 18 per cent rise in revenues.
Ahead of the results, several listed companies have released their quarterly business updates. Most of the banks have announced positive numbers, though there have been some disappointments such as Bajaj Finance where loan growth moderated.
A report from Kotak Institutional Equities said the net income of companies under its coverage will rise 1 per cent over the same period last year and 11 per cent, sequentially.
The analysts have projected improved margins for automobile companies on account of low commodity prices and a better product mix.
Banks will also report good results amid strong loan growth, stable net interest margins and a steady decline in loan-loss provisions.
The profits of oil refiners will decline sharply because of under recovery of fuel prices. Metals and mining may not do well because of lower commodity prices.
An analyst who tracks the banking sector said their quarterly performance will be marked by an improvement in asset quality because of lower slippages and higher recoveries and strong credit growth.
The deposit growth in banks will improve, but the gap with credit growth will remain.
In telecom, brokerages expect a stable quarter with a slight rise in the average revenue per user and higher 5G spends by Airtel and Jio.
