Banks And Consumer Companies Will Boost India’s Profitability Despite IT Uncertainty

While the prognosis for the country’s software exporters is clouded by global headwinds, first-quarter earnings in India are anticipated to be driven by banks and consumer companies, boosted by rising economic activity, reducing input costs, and decade-low bad loans at lenders.  

Considering how heavily they rely on domestic markets, Indian banks have mostly managed to avoid being affected by a global financial crisis. In the meanwhile, it is anticipated that the country’s consumer and capital goods industries will profit from commodity prices that have declined from their heights witnessed during Russia’s invasion of Ukraine. 

Anand Rathi Share and Stock Brokers Ltd.’s Varun Saboo, who is in charge of equity trading in Mumbai, said that costs are dropping substantially across industries, and that this will be reflected in profitability. 

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Saboo predicts that the NSE Nifty 50 index’s constituent companies would experience earnings growth in the neighbourhood of 15%. The first-quarter results season for Indian corporations will begin on Wednesday with Tata Consultancy Services Ltd., the region’s leading exporter of software services.

According to expert projections published by Bloomberg, conglomerate Reliance Industries Ltd., which makes up 0.1 percent of the Nifty 50 index, will experience an increase in operating profit in the June quarter due to good performance in its oil-to-chemicals and digital services businesses.

According to the Reserve Bank of India’s Financial Stability Report, at the end of March 2023, the bad-loan ratio at Indian banks was at a decade-low of 3.9%. By March 2024, it anticipates a further decrease in the ratio to 3.6%. 

The Nifty 50’s top four private sector lenders, HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank, might witness a quarterly profit increase of 18% to 38%. Their net interest margins, which are among the highest in Asia, are anticipated to remain above or close to 4%. According to projections put together by Bloomberg, State Bank of India, the nation’s largest lender by assets, will see its quarterly earnings more than double.