March quarter may grow due to gas, financials, and oil

March quarter earnings are likely to grow due to gas, financials, and oil. 

However, costs may impede the rest of the sector’s earnings.

Additionally, despite a rise in demand this quarter, manufacturers suffer at the hands of high oil and gas prices and rising commodity prices. 

The current Russia-Ukraine crisis further challenges India Inc this January-March quarter. 

Overall market’s March quarter growth

The growth in gas, financials, and oil may help develop the March quarter. 

Furthermore, Kotak Institutional Equities expects its Q4FY22 net income coverage universe to surge 27% y-o-y. 

A sequential 16% growth may occur by earning growth in gas, financials, and oil. 

Nevertheless, they expect a slow growth rate of 9% y-o-y in the net income of the coverage universe. 

A secure improvement in net interest income would help bank performance. 

Yes Securities Ltd analysts say, as credit offtake soared, NII growth would presumably be the strongest in the last eight quarters. 

Moreover, Motilal Oswal Financial Services Ltd expects growth from gas, financials, and oil to contribute 88% of incremental earnings in Q4FY22. 

However, excluding the financials, they expect the Q4FY22 earnings in the coverage universe to record 10% y-o-y growth. 

Markets that will not benefit from growth in gas, financials, and oil

Ambit Asset Management fund manager Aishvarya Dadheech says banks and financial institutions may have an overall divided performance. 

He further expects consumer staples, chemicals, auto, building materials, and pharmaceuticals to remain sluggish. 

He added that inflation in raw materials has led to a negative impact on the sectors mentioned above. 

As mining and metal operational performance deters, auto and consumer staples will witness slow growth (rural) due to rising commodity prices. 

Additionally, Kotak Institutional Equities expects a negative-to-single-digit y-o-y net profit growth for construction, consumer stapes, auto, metals, pharmaceuticals, and mining sectors. 

However, metal companies may reap benefits from rising steel and base metal prices. 

Nevertheless, aluminum and steel producers dependent on external sources for key inputs will experience an impact on costs and margins, impeding earnings growth. 

Lastly,

As the March quarter may grow due to gas, financial, and oil, various sectors still weigh the burden of high inflation. 

Also read – FinMin: India struggles with slow growth and high inflation