A dealer examines a gemstone at an open gem market. (Photographer: Buddhika Weerasinghe/Bloomberg)

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:

  1. Swing from loss to profit or vice-versa.
  2. Either register profit growth in at least high teens or post higher losses.
  3. Post lower profit growth than revenue growth.

Stocks With Potential Upside

Hindustan Unilever

  • 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.

Avenue Supermarts

  • 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.

ONGC

  • 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.

SBI

  • 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.

Zee Entertainment

  • 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.

Indian Hotels

  • 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.

Glenmark Pharma

  • 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.

Cyient

  • 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.

Escorts

  • 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.

Voltas

  • 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

Ashok Leyland

  • 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.

InterGlobe Aviation

  • 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.

Shree Cement

  • 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.

HDFC

  • 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.

KNR Construction

  • 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.