Sectoral Spotlight: Metals drag Q4 earnings. What should investors do?

India’s Q4 2022 corporate earnings were strong but uneven due to the poor performance of the metal sector. While the profitability of companies remained healthy, metal and oil & gas dragged Q4 earnings, with metal firms reporting a YoY decline in profit after tax for the January to March quarter. However, Motilal Oswal Financial Services estimates that aggregate metal sector profit after tax for FY24E will rise to INR41,800 crore, an 88% YoY increase from the previous financial year. Kranthi Bathini, Director-Equity Strategy at WealthMills Securities, advocates metal stocks as a long-term investment on the back of India’s infrastructure growth.