Q2. advanced costs to limit earnings growth in

Mint calculations based on Bloomberg consensus earnings estimates showed that 41 of the 50 Nifty companies (excluding financials) could post an average revenue growth of 18.6% year-on-year. However, cost pressures, however extreme it may be, can drag down operating performance and earnings growth. Consensus profit before interest, taxes, depreciation and amortization could decline 9.3% year-on-year and 14.5% sequentially in the September quarter (Q2).

“Q2 will mark five consecutive quarters of contraction in operating margins for our coverage universe, excluding financial and oil marketing companies. However, margins are expected to expand sequentially, indicating a bottom-out in EBITDA margins,” said analysts at Yes Securities Ltd. EBITDA for earnings before interest, tax, depreciation and amortization Is.

Even though crude oil and commodities fell from peak in June, high-cost crude inventories could hurt companies before softening in the third quarter.

Analyst at Elara Securities (India) Pvt Ltd. “Due to continued margin pressure, pre-financial Ebitda and overall Nifty net profit is expected to remain flat year-on-year,” Ltd. said.

Revenue growth in Q2 could be driven by domestic-oriented segments and consumption plays, led by financial and consumer discretionary sleuths. Automobiles and consumer durables may be helped by sluggish demand and stocking ahead of the festive season.

Analysts at Motilal Oswal Financial Services Ltd (MoFSL) said sectors focused on domestic consumption and investment may outperform those with global demand/cyclicals/commodities dependent.

Sectors such as metals, oil and gas which were leading the growth in the previous quarters are expected to lag behind. Declining demand and prices for base metals and steel, as well as export duties on steel, are likely to impact metal companies, while higher coal costs limit earnings. In addition, windfall taxes, declining refining margins, inventory losses and higher natural gas prices are major headwinds for oil and gas producers, marketers and distributors.

“We expect net income of automobiles (helped by improved chip availability), banks (strong credit growth, net interest margin expansion and sharp decline in debt-loss provisions) and diversified financials (accelerating credit growth) in a year. will grow rapidly. On a year-on-year basis, say analysts at Kotak Institutional Equities. They expect net income from building materials due to higher fuel and electricity costs, metals and mining due to lower commodity prices, weak realizations, and oil, gas and consumable fuels (weak). refining margins and large inventory and marketing losses in the case of downstream oil firms), to a sharp decline sequentially as well as on a year-on-year basis. Single-digit growth is expected for consumer staples as they post modest volume growth. For IT Services, modest constant currency revenue growth and margin headwinds will be major influencing factors.

Ambit Chief Executive Sushant Bhansali said, “Earnings growth for Nifty 50 is expected to remain muted around the low single digit in Q2, primarily due to margin compression in cyclical areas and also the higher base impact of Q2 last year.” asset Management.