Sakshi Batra previews the second-quarter results of companies across sectors and shares the top picks of brokerage houses ahead of the earnings season.
Top Brokerage houses such as PL Research, Edelweiss, Centrum and Antique believe these are turbulent times and that we may be in for muted earnings growth as headwinds converge. While Q1 FY19 growth was higher on back of tailwinds of a low base, overall trajectory for the second quarter is likely to be muted as economy navigates multiple factors such as rupee depreciation, higher crude prices and higher borrowing costs.
When we talk about individual sectors, there is a larger expectation from the IT sector to post steady results on the back of usual second-quarter seasonal strength, coupled with the benefits from a favourable currency. Pharmaceuticals are likely to see a soft quarter on the back of a high base.
Cross currency headwinds will impact companies which have presence in emerging markets. Valuations don’t fully reflect the threat in generics and risk in success for specialty product launches. Earnings should be relatively better for the banking sector on improving loan growth enabling NII growth to hold up.
NBFCs should face volatility on margins on increased cost of funds but asset growth should hold up. Q2 will also be characterized by higher pressure on NIMs of private banks while the results for NBFCs will be influenced by the prevailing liquidity conditions.Sakshi Batra previews the second-quarter results of companies across sectors and shares the top picks of brokerage houses ahead of the earnings season.