Analysts expect finance, consumption companies to report robust earnings

Automobile, pharma firms to report tepid numbers: Marketmen

Most analysts expect finance, cement and capital goods sectors to show robust growth in the January-March 2019 quarter, while information technology is poised for reasonable growth. However, they expect automobile makers to display sluggish numbers for the fourth quarter of the current fiscal.

Kotak Securities says banking sector will report strong earnings growth due to low base. “We expect robust y-o-y growth in the net income of: banks (strong loan growth and improvement in asset quality further aided by a feeble base quarter); consumer staples (margin expansion); and oil, gas & consumable fuels (elevated marketing margins and decent adventitious gains for downstream companies, weak base quarter for Coal India) sectors.” However, Kotak Securities expects a weak quarter for automobiles (lower sales volumes and margin compression), metals & mining (decline in realisations), and telecom (revenue pressure due to intense competition).

Prabhudas Lilladher estimates 8.6 per cent sales growth, 13.8 per cent EBIDTA growth and 76.2 per cent adjusted PAT growth. Sales growth will be led by agriculture, aviation, banks, IT and consumer staples. But Prabhudas expects a muted show from autos and pharmaceutical companies. Oil and gas will show impact of inventory gains while banks will gain due to lower provisioning and write-backs in Q4 of FY19. IT, capital goods, consumer staples and metals will have a steady quarter, according to the broking house.

According to Motilal Oswal, the fourth quarter of FY19 earnings report season will be a repeat of the third quarter, with financials driving the performance single-handedly.

PSU banks will benefit from a benign y-o-y comparison due to a loss of 24,100 crore in the previous year comparable quarter, even as profit stays flat sequentially. IT is likely to post the fifth straight quarter of double-digit profit growth, aided by momentum in deal activity. NBFCs might face significant deceleration in profit growth, but still post a respectable double-digit number, Motilal added.

Kotak Securities expects net income of the BSE 30 index to grow 1 per cent y-o-y, and that of Nifty 50 index to increase 5 per cent y-o-y, excluding banks. “We estimate EPS of the BSE 30 index at 2,097 for FY20 and 2,468 for FY21. Our EPS estimates for Nifty 50 for FY20 and FY21 are 641 and 750, respectively,” it added.

Reliance Securities says earnings growth for Nifty 50 index companies could likely be 16 per cent y-o-y for the quarter. Motilal Oswal expects Nifty PAT to grow at 15 per cent in Q4 FY19 on a moderate base (8 per cent growth in the base quarter). Excluding OMCs, Nifty PAT growth is expected at 19 per cent, it added.

‘Sharp dip’

However, rating agency Crisil Research expects y-o-y corporate revenue growth for the current quarter to be at 8-9 per cent, down sharply from the average of nearly 16.5 per cent in the previous three quarters.

The plunge would be led by key commodities such as steel products, aluminium, natural gas and petrochemicals, which have softened significantly, impacting realisations. The forecast is based on Crisil’s analysis of 354 companies, which account for about 67 per cent of the market capitalisation of the NSE, excluding banking, financial services and insurance (BFSI) and oil sectors, it added.