12 Stocks You Need To Watch This Earnings Season
Crude oil has fallen after hitting a four-year high last year. Still, weaker-than-expected festive season sales and a fluctuating rupee is expected two weigh on India Inc.’s third-quarter earnings season.
Here’s a list of 12 large- and mid-cap stocks compiled by BloombergQuint that could either lead or drag earnings. Brokerages expect these NSE 500 companies to:
- Swing from loss to profit or vice-versa.
- Either register profit growth in at least high teens or post higher losses.
- Post lower profit growth than revenue growth.
Stocks With Potential Upside
- Revenue is expected to grow 10 percent, according to Motilal Oswal.
- The brokerage expects volume to grow 6 percent with margin expansion aided by falling costs of key raw materials.
- It expects profit to grow 17.8 percent on a yearly basis.
- Sales and profit of the operator of the retail chain D-Mart are expected to grow 34 percent and 18.6 percent, respectively, because of its low-cost, low-price strategy, Prabhudas Lilladher said.
- Margin would improve to 9.1 percent on a sequential basis, the brokerage said.
- The state-run oil and natural gas explorer is expected to post one of its best earnings growth compared with its state-run peers, Nomura said. Revenue and profit would rise 20 percent and 41 percent, respectively, on yearly basis, the brokerage said. It estimated a 5 percent increase in production and improved realisation year-on-year.
- Net interest margin of India’s largest state-run lender will improve as fresh slippages normalise and pricing power in pockets returns, said Jefferies.
- On a standalone basis, the bank is seen to report 20.3 percent growth in net interest income and a Rs 4,136-crore profit against a loss of Rs 2,416.4 crore in the year-ago period, according to the brokerage.
- The private broadcaster’s profit would grow in double digits as ad and subscription revenue rise 18 percent and 20 percent, respectively, on a yearly basis, Nomura said.
- The brokerage expects revenue and profit to grow 16 percent and 14 percent, respectively, on a sequential basis, with a stable margin.
- Aided by expanding margin and falling interest costs, Motilal Oswal expects the Tata Group-owned hotel chain’s profit to grow 56.3 percent.
- The brokerage predicts its revenue growth at 9.5 percent and estimates that margin will expand 2.5 percent, or 250 basis points.
- The drugmaker’s revenue will grow 15 percent and profit more than double over last year due to strong growth in its domestic and U.S. market share, Axis Capital said.
- U.S. sales and margin will improve due to drugs such as gWelchol (used to treat cholesterol), gVagifem (for menopause symptom relief) and gProtopic (used to treat a skin condition called eczema), it said.
- Prabhudas Lilladher expects the IT firm’s profit to grow 52.3 percent year-on-year.
- The services segment, which accounts for 90 percent of sales, is expected to grow 2.5 percent over last quarter in constant-currency terms.
- The maker of tractors and construction equipment is expected to register one of its best earnings growth.
- Kotak Institutional Equities sees its profit surging 59 percent on the back of a 39 percent rise in sales on yearly basis.
- Robust performance of railways and construction equipment segments will aid sales and profit, the brokerage said.
- Ebitda margin is likely to improve by 110 basis points year-on-year led by operating leverage benefits and increased profitability in its railways segment, it said.
- Although revenue of the Tata Group company is expected to grow 22 percent, operating profit would rise 6 percent due to margin pressure in its unitary cooling division, according to Motilal Oswal.
- The brokerage expects net profit to decline by 1.9 percent due to the import duty hike on air-conditioning materials.
Stocks Expected To Face Downside
- A 6.1 percent decline in sales volumes on yearly basis is expected to impact earnings.
- Kotak Institutional Equities sees the truckmaker’s sales declining 8.2 percent and expects Ebitda to drop 29 percent due to higher discounts and fewer models to choose from.
- The brokerage expects its profit to tumble 36 percent over the year earlier.
- The operator of IndiGo, India’s largest airline, will face another challenging quarter as the near 75 percent increase in fuel costs from a year earlier will hamper profit growth.
- Edelwiess Securities expects its profit to decline 53 percent despite a 30.7 percent growth in revenue.
- Motilal Oswal expects weak performance in the cement maker’s power business to impact profitability.
- Profit is expected to decline 16 percent on an annual basis despite the brokerage projecting an 11 percent volume growth and 17 percent sales growth due to better realisations.
- Antique Stock Broking expects India’s largest mortgage lender’s net interest income, pre-provisioning profit and profit to decline by 3.3 percent, 25.1 percent and 20.4 percent, respectively.
- The brokerage attributes the forecast to rising cost of funds and moderation in loan growth.
Punjab National Bank
- India’s second-largest state-run lender is expected to report a loss of Rs 2,036 crore compared with a profit in the same quarter last year, according to Prabhudas Lilladher.
- The brokerage projects a 1.4 percent uptick in net interest income, which will be offset by factors such as asset quality pressure, losses, gratuity and wage hikes.
- Pre-provisioning profit, the brokerage said, would decline 28.7 percent.
- Motilal Oswal expects sales to remain flat, with net profit declining by 48 percent to levels seen last year.
- The brokerage sees margin contracting by 4.7 percent, or 470 basis points on a yearly basis as high-margin orders have already been executed.