Moneycontrol Pro Panorama | The earnings juggernaut is about to roll: It's time to take stock

We will know more about the financial health of companies in the coming weeks as quarterly performance and accompanying statements unfold.

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The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of. 

The earnings season is upon us. India’s corporate bosses will suit up to present their quarterly report cards to investors. The parade of large-cap earnings will be kicked off on April 12 by the information technology sector (both TCS and Infosys will detail their January-March performance).

Report cards are of past performance, but what investors want is a peek into the future. Answers will be sought on whether India’s IT sector will be able to weather the global slowdown even as it grapples with the outcome of the bank collapses in the US. The prospects for IT are still bright as our column points out here. Demand for their services will continue to remain decent and client spending is expected to grow 5.5 percent in 2023, not far from the 5 percent seen last year. The past quarter’s performance won’t have sparks, given the banking troubles in key client markets, but it won’t be dire as our sector preview points out.

Understandably, India’s IT chief executives won’t be giving out offer letters like they used to in the past, as our column goes on to say. IT jobs won’t come so easy, as a cloud of subdued global growth hovers above. Indeed, growth is becoming a sticking point, something that markets believe would force trigger-happy central banks to pause. The Reserve Bank of India (RBI) has already done so, pausing on its rate hiking cycle in last week’s meeting. But unlike other countries, India’s growth prospects have not been dented. In fact, the RBI has increased its gross domestic product (GDP) growth projection for FY24 a bit to 6.5 percent. This is more optimistic than private forecasters and the World Bank. The International Monetary Fund (IMF), which has been historically more sanguine than the RBI, will release its projections later today.

The RBI’s Monetary Policy Report, that accompanies its policy twice a year states that growth would be supported by rural demand, infrastructure spending and private investment. The only domestic uncertainty seems to be consumption. Consumption demand has not impressed economists, with many pointing to pressures on discretionary demand. That means sectors such as consumer durables, automobiles and retail could see tough times ahead. That said, early-bird quarterly snapshots provided by some companies suggest that demand has not reduced. In fact, the RBI’s consumer confidence survey shows Indians are willing to indulge in non-essential spending over the next one year. Indeed, the central bank’s
surveys present a glossy outlook for both households and industry.

That means India’s corporate chief executives should give at best an exuberant outlook and at worst a fair one for their businesses. Of course, the exuberance is not expected to be uniform across different sectors and some pockets of the economy have faced a tougher environment. For instance, agrochemical firms could see slower sales growth in calendar 2023 as pointed out in our column here.

We will know more about the financial health of companies in the coming weeks as quarterly performance and accompanying statements unfold. Investors will use it to tweak earnings expectations and as a result, stock valuations could change.

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Technical Picks: AB Capital, Guar gum, DLF, Bajaj Finance, Wipro and USD-INR (These are published every trading day before markets open and can be read on the app) 

Aparna IyerMoneycontrol Pro