Corporate earnings may worsen in Q3, but profits could get tax-cut boost

Banks, OMCs are expected to bring most of the incremental growth

Corporate earnings during the October-December 2019 quarter (Q3FY20) are likely to give a contrasting picture. Analysts expect an improvement in net profit growth, thanks to the gains from the cut in corporate tax and a better showing by retail lenders, but the contraction in revenues is likely to get worse, indicating a further weakness in aggregate demand in the economy. This, analysts say, rules out a quick growth recovery, presenting a fresh challenge for corporate planners.

The combined net profit of the Nifty 50 companies is expected to grow by 6.7 per cent year-on-year (y-o-y) during Q3FY20, as against 19.3