Q4 FY23 Results Preview - Commentaries On FY24 Demand And Margins Remain Critical: Axis Securities

Axis Securities Report

Q4 FY23 earnings season was marked by weaker macro, rising interest rates, banking challenges in the U.S. and European markets, and moderation in discretionary demand. On the positive side, earning season was led by the sequential margin expansion on account of moderation in commodity prices and the uptick in credit growth.

The export-oriented themes, however, are likely to laggard. We believe the broad-based earnings momentum, which remained robust for multiple quarters, is likely to pause for a brief time in Q4 FY23.

Based on our and consensus estimates, we forecast Nifty to deliver Revenue/Ebitda/profit after tax growth of 11%/14%/12% respectively. Moreover, excluding oil and gas and metals, Nifty revenue/Ebitda/profit after tax is expected to grow by 18%/24%/25% respectively.

On the sectorial front, the financial and automobile sectors are likely to post the highest incremental earnings while a contraction is expected in the metals sector.

The Indian economy exhibited remarkable resilience in Q4 FY23 and the Reserve Bank of India governor also highlighted a visible uptick in most of the high-frequency indicators over the last quarter.

High-frequency indicators such as GST collection, power consumption, and E-way bills are pointing upwards on a sequential basis, indicating robust demand even after the festival season. Rural demand is also recovering and may see a further pick-up in the upcoming month on account of better Rabi crops. Discretionary demand, though, remained weak during the quarter.

Keeping this in perspective, we believe the majority of the companies will likely report revenue growth in line with the expectation. However, some pressure is likely to be visible on commodity producers and the exportoriented sectors.

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