India Inc Q3 results review: Nifty firms post nearly 30% rise in net profit

India Inc's third-quarter performance largely came in line with expectations despite unprecedented input cost headwinds. Data shows that the consolidated net profit of Nifty companies (ex-BFSI) jumped nearly 30 per cent year-on-year (YoY) during October-December period. On the other hand, gross sales increased 29 per cent YoY during the same period. 

Data shows that 20 companies from sectors including pharmaceuticals, oil and gas, metals, automobiles, capital goods and power posted over 10 per cent growth in profit after tax. The consolidated net profit of Dr Reddy's Laboratories jumped over 25 times to Rs 709.30 crore. 

Oil & Natural Gas Corporation, Mahindra and Mahindra and Tata Steel also posted 334 per cent, 182 per cent and 158 per cent rise in net profit, respectively, during the quarter under review.

Hindalco, Divi's Laboratories, Titan Company, BPCL, JSW Steel, Coal India, Reliance Industries, Indian Oil Corporation, Grasim Industries, Tata Consumer Products, NTPC, Hindustan Unilever, UPL, ITC, Tata Consultancy Services, Infosys and Sun Pharmaceutical posted 10 per cent-96 per cent growth in consolidated net profit in Q3FY22.

While summing up the third-quarter earnings, global financial services firm Morgan Stanley said that earnings growth was positive in nine out of 10 sectors. Materials and financials (led by metals and PSU banks) reported the highest growth in earnings, while consumer discretionary was the laggard. 

"The energy and materials sectors reported the fastest growth in revenues, while healthcare and industrials reported the most improvement in margins. Utilities had the biggest beat in earnings against our analysts' expectations," Morgan Stanley said.

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Cement firm UltraTech Cement, IT majors Tech Mahindra and Wipro reported single-digit growth in net profit. 

"Cement sector was adversely impacted by weak volumes owing to unseasonal rains while high energy costs took a severe toll on margins and profitability," Motilal Oswal Financial Services said in a report.

On the other hand, players like Power Grid, Cipla, Bharti Airtel, Adani Ports, HCL Technologies, Eicher Motors, Bajaj Auto, L&T, Asian Paints, Britannia Industries, Nestle India, Shree Cement, Hero MotoCorp and Maruti Suzuki reported a fall in net profit in the quarter gone by.

Market watchers believe that the earnings of select companies were impacted by rising raw material prices. Motilal Oswal Financial Services said, "Corporate earnings for Q3FY22 came in line with our expectations. However, sectors reported a wide divergence as autos, cement, consumer staples and durables, specialty chemicals, healthcare and metals were impacted by sharp raw material inflation. BFSI was the standout sector in this quarter aided by improvements in loan growth and disbursements, while asset quality improved sequentially propelled by moderation in slippages as well as healthy recovery and upgrades."
 
Standalone results of BFSI companies in the Nifty index witnessed an increase of nearly 24 per cent in net profit during the quarter. Bajaj Finance posted an 84 per cent rise in net profit at Rs 7,222.33 crore. SBI Life Insurance, IndusInd Bank, ICICI Bank, HDFC Bank, Kotak Mahindra Bank, HDFC and HDFC Life posted somewhere between 3 per cent-57 per cent rise in net profit. The standalone net profit of Bajaj Finserv grew 1,906 per cent to Rs 168.50 crore. Overall, the consolidated net profit of all companies in the Nifty 50 index increased 28 per cent YoY in the December quarter.

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