You are here: Home » Companies » News
Business Standard

Signs of better investment cycle pushes corporate profits: ICICI Securities

On an aggregate basis, corporate profits are expected to grow in a range of 15 per cent-30 per cent over FY22-FY24E with the NIFTY50 likely to grow at the lower end of the range

Topics
ICICI Securities | equity investments | Indian Economy

IANS  |  New Delhi 

corporate, company, firms, board, governnance

Low leverage effects, earnings beat and nascent signs of improving investment cycle are providing confidence on sustainable growth in corporate profits, said .

Key positives for the current uptrend in profit cycle is that it is not yet inflated by the effects of 'operating and financial leverage' as capacity utilisation is still in the 60-70 per cent range on a trailing 12-month basis and industry credit is just showing signs of revival from a decadal low, it said.

"Prospects for the investment cycle are improving in terms of rising 'animal spirits' observed in the two major growth engines of the capex cycle (private industrials and real estate - link)."

Also, high optimism from earnings is missing if the trend of higher beats versus misses is any indication as High operating and financial leverage combined with high optimism typically lead to huge earnings disappointment in case demand slumps.

On an aggregate basis, corporate profits are expected to grow in a range of 15 per cent-30 per cent over FY22-FY24E with the NIFTY50 likely to grow at the lower end of the range while higher growth is emanating from the mid- and small-cap stocks.

The higher growth is attributable to significantly larger impact of Covid on mid- and small-cap space and the rapid opening up of the economy, which is likely to show higher growth on a depressed base, it added.

Mid- and small-caps have the lion's share of the most severely Covid-impacted sectors such as hotels, resorts, restaurants, cinema, travel agents, travel bags, airlines, real estate, retail stores, capital goods, small banks and NBFCs.

Besides, FPI flows continue to be negative although the pace of selling reduced in April 2022 as compared to March 2022, which was a month of record outflow.

Sectoral flows for April (1st-15th) indicate that FPIs continued to be net sellers in banks, financials, consumer discretionary, and industrials.

--IANS

ad/dpb

 

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, May 04 2022. 12:59 IST
RECOMMENDED FOR YOU