India Inc's revenue growth is expected to accelerate in the June quarter, but higher energy and input costs could squeeze margins across several sectors, according to earnings previews from Jefferies and Morgan Stanley.
Jefferies expects revenue growth for its coverage universe, excluding oil and gas, metals and financials, to accelerate to a 13-quarter high of 16% year-on-year and 2% sequentially. Earnings, excluding oil and gas and metals, are expected to remain resilient with 12% year-on-year growth.
Banks, NBFCs And Telecom To Lead Growth
Banks are likely to post around 15% growth in core earnings, excluding treasury income, supported by strong loan growth and better credit costs. Margins, however, could see some sequential compression.
Among NBFCs, Jefferies expects profit growth of over 25% across its coverage universe, excluding housing financiers and SBI Cards. The growth is expected to be supported by robust loan growth, range-bound net interest margins and lower credit costs.
Bharti Airtel is expected to continue its healthy run, with Ebitda growth of around 15%. Capital market plays could also deliver a strong quarter. Exchanges such as BSE and MCX are expected to report 1.6–2 times year-on-year earnings growth as increased market volatility drives higher futures and options volumes.
Internet Companies, Capital Goods Among Bright Spots
Internet companies are expected to report better Ebitda margins as quick-commerce profitability improves. Jefferies expects Eternal and Nykaa to benefit, while PB Fintech could see some pressure from operating leverage.
Power transmission and distribution equipment companies, including Siemens Energy, Hitachi Energy, GE Vernova T&D and CG Power, could see Ebitda rise more than 25%, supported by topline growth of over 19%.
Most automobile companies, excluding Tata Motors Passenger Vehicles, Ashok Leyland and Hyundai Motor India, are expected to report topline growth of over 20%. However, higher input prices could compress margins across the sector.
IT, Cement And IndiGo Face Pressure
The picture is weaker for IT companies. Jefferies expects overall revenue growth across its coverage universe to remain flat sequentially, while Ebitda margins could decline by around 50 basis points.
Staples companies are expected to see volume growth of around 6% year-on-year but largely flat margins. Cement, pharma, IndiGo and chemicals are also expected to report year-on-year earnings declines.
Morgan Stanley Sees Growth Intact
Morgan Stanley also expects growth momentum to remain healthy, backed by policy stimulus and high-frequency indicators that point to potential upside surprises.
The brokerage expects all 10 sectors under its coverage to report positive revenue growth, led by consumer discretionary, communication services and industrials. Earnings growth is likely to be led by communication services, materials and financials, while energy and industrials could report declines.
At the stock level, Morgan Stanley expects Bharti Airtel and Axis Bank to be the biggest contributors to aggregate BSE Sensex earnings, while IndiGo is expected to be the weakest performer.
The key risk heading into earnings season is margin pressure. Morgan Stanley expects margins to decline in three of 10 sectors, while Jefferies also sees higher commodity costs weighing on profitability even as the broader revenue growth cycle remains resilient.
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