Unprecedented Growth in Corporate Profitability in Q4 FY24: Financials and Consumer Discretionary Sectors Lead the Way
In the final quarter of FY24, corporate profitability saw a remarkable uptick, with the Financials and Consumer Discretionary sectors driving the surge. Net revenue growth for Nifty50 and Nifty500 companies stood at 10.2% and 9.9% year-over-year (YoY) respectively, fueled by strong credit demand and robust auto sales. These sectors contributed significantly to the overall revenue growth of Nifty50 and Nifty500 companies.
While the full fiscal year showed more subdued growth rates of 9.3% for Nifty50 and 7.9% for Nifty500 companies, operating profit growth outpaced revenue growth. Nifty50 and Nifty500 companies saw increases of 10.7% and 12.2% YoY respectively, despite higher operating expenses. This led to substantial margin improvements.
Adjusted net profit (PAT) growth was particularly strong in Q4FY24, with Nifty50 companies experiencing a 21.5% rise and Nifty500 companies seeing a 17.9% increase. Over the full fiscal year, PAT growth for Nifty50 was 27%, while Nifty500 saw a 33% increase. Financials and Consumer Discretionary sectors were major contributors to earnings growth in both indices.
Export-oriented sectors faced challenges due to weak external demand, while domestic cyclical sectors like Financials, Industrials, and Consumer Discretionary drove overall earnings growth. Looking ahead, consensus earnings estimates project modest increases for the top companies by market capitalization in FY25 and FY26, with Financials and Materials expected to contribute significantly to earnings growth.
The earnings growth outlook for FY25 is supported by various factors, including resilient urban demand, recovery in rural demand, and sustained government capital expenditure. However, rising input costs could pose a challenge.
In conclusion, the Q4FY24 earnings review highlights the critical role of Financials and Consumer Discretionary sectors in driving corporate profitability. As companies navigate challenges and potential headwinds, sustained performance in key sectors will be vital for overall growth.
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Analysis: The article discusses the significant improvement in corporate profitability in Q4 FY24, driven by the Financials and Consumer Discretionary sectors. Despite subdued growth rates for the full fiscal year, operating profit outpaced revenue growth, leading to margin improvements. The outlook for earnings growth in FY25 is positive, supported by various factors. Investors should pay attention to key sectors like Financials and Materials for potential opportunities in the market.