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The highlight of the third quarter results for FY23 is the recovery of margins by the corporate sector, said ICICI Securities in a report.

According to the report, Nifty operating margins (ex-financials) rose 230 basis points (bps) QoQ to 17 per cent, primarily led by savings realised from lower raw material costs as gross margin expanded 230 bps QoQ.

"This is post a low of 14.7 per cent margin recorded in the last quarter i.e. Q2FY23. On an aggregate basis (ex-financials), the Nifty topline for Q3FY23 was largely flat QoQ at Rs 13.4 lakh crore with EBITDA up 16 per cent QoQ at Rs 2.3 lakh crore and PAT by 16.6 per cent QoQ at Rs 1.1 lakh crore," the report notes.

On a YoY basis, Nifty topline was up 16.9 per cent while PAT was down 3.9 per cent YoY primarily tracking muted profitability in the commodity space viz. metals and oil & gas domain.

According to ICICI Securities, the management commentary across businesses was positive on demand outlook, especially on domestic front amid the "progressive Union budget FY24" wherein government proposes to spend Rs 10 lakh crore (up 33 per cent YoY)as capex with tangible multiplier effect that could potentially drive broad based economic growth domestically.

Encouragingly, growth capex was bundled with a path of fiscal consolidation.

Including financials (BFSI), at the Nifty level, the trend was similar with 1.6 per cent QoQ growth in topline and 13.8 per cent QoQ growth in PAT.

On a YoY basis, however, it outperformed the ex-financials subset due to healthy double digit credit growth and further improved asset quality in banking space.

In the banking space, business momentum continues to remain healthy in Q3FY23, attributable to robust demand in the retail and MSME segment.