Q4 FY23 Results Review — Financials Reprise Role, Auto Shines: Motilal Oswal

Motilal Oswal Report

Amid a challenging global macro backdrop, India Inc.’s profitability remained healthy in Q4 FY23 – in line with our expectations. Our coverage universe reported the highest earnings growth in the last four quarters.

Corporate earnings were driven by financials and auto, while metals dragged aggregate profitability.

Metals remain a drag; banking, financial services and insurance continues to lead: Earnings of the our coverage universe jumped to a four-quarter high of 15% YoY (our estimate of +14% YoY) in Q4 FY23, while Nifty’s earnings growth stood at 16% YoY (our estimate of up 14% YoY). This aggregate performance was fueled by BFSI/auto that posted 43%/115% YoY earnings growth.

Conversely, weaker-than-expected performance of metals that clocked 45% YoY earnings decline (profit after tax of all companies within our coverage declined YoY with Tata Steel Ltd.’s profit plunging 83% YoY) dragged overall growth. Excluding metals and oil and gas, our universe and Nifty clocked a solid 34% and 30% YoY earnings growth (versus expectations of 29% and 23% growth), respectively.

Along with metals, the cement, healthcare and retail sectors too dragged Q4 FY23 earnings. Excluding BFSI, profits grew 4% YoY (our estimate of up 5%) for our universe.

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