Mumbai: The aggregate year-on-year revenue growth of the Nifty 50 companies for the December quarter is expected to remain in single digits for the seventh quarter in a row. On the other hand, after growing in single digits in the previous two quarters, net profit may grow in double digits helped by select companies in the banking, capital goods, finance, healthcare, and pharma sectors. According to the ETIG quarterly estimates, the sample's revenue and net profit may grow by 5.7% and 13.2%, respectively. In the previous quarter, revenue and profit had grown by 5.6% and 6.7%, respectively."Overall, a recovery in top line and profits seem very gradual, a potentially disappointing consensus. This poses risks to mid-teens earnings growth forecasts for H2FY25 and FY26," said Devarsh Vakil, retail research head at HDFC Securities.Sectors including metals, oil & gas, and cement are expected to pull down the overall performance of the sample. "We estimate the earnings of the companies that we track to increase by 6%; excluding metals and oil & gas, the earnings growth will improve to 10%," said Gautam Duggad, head of research-institutional equities at Motilal Oswal Financial Services.The operating margin is likely to improve by 20 basis points year-on-year to 19.8% for the December quarter, similar to the previous quarter. The margin will stay at around 20% for the fourth consecutive quarter.Barring the short-term challenges in terms of lower government expenditure and slower economic growth amid general and state elections over the past two quarters, analysts expect the long-term growth prospects to remain intact. "As the aftereffects of the slowdown in government spending and monetary tightening recede, we expect the corporate earnings growth for FY26E to look healthy," said Duggad. He expects 17% Nifty 50 earnings growth for FY26 compared with the anticipated 4% growth for the current fiscal year.Vakil expects domestic cyclicals to make a comeback in the second half of calendar 2025. "Our preferred sectors are financials, consumer discretionary, healthcare, industrials, real estate and allied sectors. We remain underweight on automobiles, consumer staples, oil & gas, mid-cap IT, and small banks," he said.117037552Sectoral TrendsAutomobiles: Passenger vehicle makers reported better year-on-year volume growth of around 12% helped by festive demand while two-wheeler growth was tepid at 5%. The tractor segment recorded a strong 16% growth. Maruti Suzuki and Mahindra & Mahindra are expected to report double-digit growth in revenue and profit while Tata Motors may report sluggish numbers amid flat volumes and pressure on JLR margins.Banking and Finance: While the top lenders are expected to continue reporting double-digit earnings growth, deceleration is likely given slowing credit offtake and sustained pressure on net interest margins. Slippages in microfinance and unsecured segments may affect overall asset quality.Capital Goods: The order flow was selective over the past few quarters due to general and state elections mainly in segments including power transmission and distribution, renewables, and buildings. Backed by existing orders and superior execution, Larsen & Toubro is likely to report double-digit growth in revenue and net profit.Cement: Cement volumes recovered in the third quarter with an estimated 8% YoY growth. However, the all-India average cement price was around 8% lower YoY in the third quarter while showing signs of revival sequentially. Top companies are likely to report lower revenue and profit YoY.FMCG: While an uptick in rural consumption bodes well for FMCG companies, the slowdown in urban demand is likely to limit the volume growth. The festive season failed to provide a major fillip to consumer demand amid sustained inflation. Companies are likely to post subdued volume growth and pressure on their operating margins. IT: Seasonal factors including holidays and furloughs are expected to affect the performance of the IT sector. The sequential dollar-denominated revenue growth is likely to be flat to marginal positive while select companies may show margin improvement fuelled by operating efficiency. Metals: Ferrous companies are expected to perform poorly given the weak steel prices while increased prices of alumina and aluminium are likely to support the performance of non-ferrous companies. For Hindalco, domestic operations are expected to offset the lacklustre performance of the Novelis division affected due to lower shipments. Pharma: A weak rupee, the onset of the flu season boosting sales of respiratory and acute medications in the domestic market, as well as new product launches in India and the US are the broad factors hinting at a strong December quarter show for Indian pharma companies.
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