ICICI Securities: Q1 GDP To Reflect Earnings Beat; Midcap Performance Reasonable
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ICICI Securities Report
Examining the earnings performance of Nifty 50, Nifty Next 50 and Nifty Midcap 100 index, it is clear that the economic activities of agrochemicals, telecom, food, FMCG, pharma, financials, IT and utilities have provided positive contribution to the operating profit pool of the above three indices.
On the flip side, discretionary consumption, industrials and commodities have maximum contribution to the operating loss pool.
As per consensus, India’s Q1 FY21 gross domestic product is expected to contract approximately 20% and may be the worst quarter of growth during the ongoing Covid-19 pandemic.
However, going by the higher number of earnings ‘beat to miss’ ratio of approximately 1.4 times by India Inc, during Q1 FY21 so far, the actual GDP could also beat consensus expectations (our estimate: 15.7%).
Overall for Nifty 50, Next 50 and Midcap 100 index operating profit contracted on a YoY basis by down 7%, down10% and down 12% while net income contracted by down 35% down 31% and down 141% (Vodafone Idea Ltd. impact).
Financials lifted operating income and excluding Financials, operating profit contracted by down 20%, down 22% and down 28% and net income contracted by down 50%, down 40% and down 297% for the above three indices respectively.
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