After a broad-based earnings bounce back in FY21, growth narrowed sharply in FY22. Key highlights: 1. Top line recovery is moderate at 12% YoY and is largely led by prices, while volumes have been weak. 2. Margin pressure due to higher input prices. Resulting in corporates pruning fixed costs again – wage bill growth for BSE500 (ex IT) has slowed to 7% YoY – pre-COVID low. 3.Banking sector’s asset quality continues to improve as MSMEs bounce back; although not out of the woods yet. Way forward: Going ahead, there are risks arising out of earnings downgrades (after upgrades in the last two years) as earnings become increasingly demand dependent (as opposed to being cost and price dependent until now) – which is weak and outlook uncertain. This, along with high valuations, and tightening global liquidity warrants a decisive pivot towards low beta (risk) Q3FY22 earnings: Demand revival slow, margin pressures high Revenue: Topline incre...