The low base of December 2018 earnings and reduction in corporate tax rate cut may help companies report better numbers on a YoY basis. We expect double-digit earnings growth for most sectors, said Rusmik Oza, Senior VP and Head of Fundamental Research-PCG at Kotak Securities.
The Indian markets had a volatile week, with recovery setting in in the last two trading sessions. The Sensex rallied more than 200 points while the Nifty reclaimed 12,200 levels on January 24.
For the week, the Sensex closed 0.79 percent lower while the Nifty ended with losses of 0.84 percent. The Nifty Mid-cap rose 1.6 percent for the week.
Rusmik Oza, Senior VP and Head of Fundamental Research-PCG at Kotak Securities expects earnings of Nifty50 to increase by 21 percent in Q3FY20 on year-on-year (YoY) basis, thanks to the steep improvement in BFSI sector.
"The low base of December 2018 earnings and reduction in corporate tax rate cut may help companies report better numbers on a YoY basis. We expect double-digit earnings growth for most sectors except for media, metals and mining and transportation sectors," Oza said.
The broader market performed in line with benchmark indices. The BSE Mid-cap index rose 0.77 percent while the BSE Small-cap index ended with gains of 0.5 percent.
"Close observation of line chart (closing price chart) on weekly time frame reveals almost the formation of round top and a close below 12,225 in next week can set the tone for a sharp correction on the downside. Hence, the sustainability of last two sessions of upmove remains doubtful though the current pull backswing has a logical target placed in the zone of 12,290–12,360 kinds of levels," Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in told Moneycontrol.
Here are the top 10 companies which declared December quarter results this week:
Zee Entertainment Q3 profit falls 38%
Zee Entertainment Enterprises' third quarter (October-December) consolidated net profit fell sharply by 37.9 percent YoY due to lower revenue and operating income. Profit during the quarter declined to Rs 349.4 crore, from Rs 562.4 crore in the same period last year. Revenue from operations in Q3 dropped 5.5 percent to Rs 2,048.7 crore YoY, dented by lower advertising revenue.
Numbers largely missed analyst expectations. Profit was estimated at Rs 416 crore on revenue of Rs 2,081 crore and EBITDA was expected at Rs 595 crore with margin at 28.6 percent in Q3, according to an average of estimates of analysts polled by CNBC-TV18.
Larsen & Toubro Q3 profit grows 15.2%
Infrastructure and engineering major Larsen & Toubro (L&T) reported profit growth of 15.15 percent YoY to Rs 2,352 crore in the quarter ended December 2019, driven by lower tax cost (down 37 percent YoY) and operating income. Profit for the same quarter last year was Rs 2,041.62 crore. Revenue from operations in Q3FY20 grew 5.9 percent to Rs 36,242.68 crore YoY impacted by execution in the infrastructure business, missing the estimates of Rs 39,330 crore of a poll of analysts by CNBC-TV18.Infrastructure segment recorded revenue of Rs 17,249 crore for the quarter, registering a 5 percent YoY decline. "Challenges faced in projects in Andhra Pradesh and for a short duration in Maharashtra and Delhi,
coupled with lower fund allocation in some states adversely impacted the execution progress," company reasoned.
R Shankar Raman, CFO at L&T said that the company was on track to meet the full year (FY20) order inflow growth guidance of 10-12 percent YoY and maintained revenue growth forecast at 12-15 percent. "Order inflows are robust despite deferrals in order booking and we have revenue visibility for the next 2-2.5 years," Raman said.
Axis Bank reports profit of 4% in Q3
Axis Bank was back in the black in the December quarter, reporting a 4.5 percent YoY gain in net profit at Rs 1,757 crore. The private sector lender had reported a loss of Rs 112.08 crore in the previous quarter. Net interest income (NII) of the bank grew 15.16 percent YoY to Rs 6,452.98 crore, while net interest margin was at 3.57 percent, the highest in the last 10 quarters.
The bank expects a loan growth of 5-7 percent above the industry level. The net interest margin (NIM) is expected to be higher than FY19. However, NIM for 4QFY20 will have some impact due to LCR accounting change. The management is confident of credit cost moderating over the medium term.
The bank’s total slippages for the quarter stood at Rs 6,214 crore, including corporate slippages of Rs 3,891 crore, of which 81% came from BB and below rated clients.
Asian Paints Q3 profit jumps 20% to Rs 780 cr
Asian Paints on January 22 reported a 20.5 percent growth in consolidated profit in the December quarter, driven by lower tax cost and good operating performance. The profit increased to Rs 779.71 crore from Rs 647.28 crore during the same period last year. Revenue from operations was at Rs 5,420.28, up 3 percent YoY, which was lower than Rs 5,662 crore estimated by a CNBC-TV18 analysts’ poll.
The company’s earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 7.7 percent YoY to Rs 1,189.4 crore and margin expanded 96bps to 21.94 percent in the December quarter, which were both better than analysts’ estimates.
"Asian paints posted a good set of results amid a slowdown in the economy, reporting double-digit growth with a better-than-expected EBITDA margin of 21.9 percent. There is a slight miss on revenue front but profit is in line with expectations," Santosh Meena, Senior Analyst at TradingBells told Moneycontrol.
Kotak Mahindra Bank Q3 profit jumps 24%
Private sector lender Kotak Mahindra Bank on January 20 registered a 23.62 percent year-on-year growth in Q3FY20 profit at Rs 1,595.9 crore but asset quality weakened sequentially and year-on-year loan growth was at a multi-quarter low. The profit growth was driven by higher other income (up 37.34 percent YoY), operating income (up 23.20 percent YoY) and lower tax cost (down 48.78 percent YoY), but was limited due to higher employee cost.
Numbers missed analyst expectations. Profit was estimated at Rs 1,710.5 crore and net interest income at Rs 3,539.2 crore for the quarter, according to average of estimates of analysts polled by CNBC-TV18. The bank's consolidated profit increased by 27 percent YoY to Rs 2,349 crore and net interest income rose by 17.6 percent to Rs 4,441.6 crore in quarter ended December 2019.
UltraTech Cement reports 48.5% jump in standalone net profit
UltraTech Cement, one of India’s the largest cement manufacturers, on January 24 posted lower-than-expected numbers for the December quarter. On a standalone basis, the company's net profit jumped 48.5 percent YoY to Rs 643.2 crore, which was below the expectations of the brokerages. A CNBC TV18 analyst poll had estimated the number to be around Rs 771 crore.
"UltraTech, with its presence across all the zones in the country, is the best positioned to take advantage of the revival in cement demand, despite the anomalies that may get created in demand patterns in some parts of the country due to extraneous reasons," the company said.
Canara Bank net profit rose 3.8% to Rs 330cr
State-owned Canara Bank on January 23 reported a 3.8 percent rise in its net profit to Rs 329.62 crore in the third quarter of the current financial year, mainly due to a decline in the proportion of bad loans. The bank's profit was Rs 317.52 crore during the December 2018 quarter. Its total income stood at Rs 14,001.63 crore during the quarter ended December 2019, up from Rs 13,513.35 crore in the year-ago period, Canara Bank said in a stock exchange filing.
The net non-performing assets (NPAs) as a percentage of total assets stood at 5.05 per cent, down from 6.37 percent a year ago. Similarly, the percentage of gross NPAs also narrowed to 8.36 per cent from 10.25 percent.
SBI Life Insurance Q3 net profit up 47.5%
Private life insurer SBI Life Insurance posted a 47.5 percent YoY increase in its December quarter (Q3) net profit at Rs 389.77 crore. The insurer's net earned premium rose by 28 percent YoY to Rs 11,694.51 crore in Q3. The Value of New Business (VoNB) increased by 27 percent to Rs 1,470 crore for the nine months (9M) of FY20. Further, the VoNB margin increased by 80 bps to 18.3 percent in 9MFY20.
SBI Life's assets under management (AUM) grew by 22 percent YoY to reach Rs 1.64 lakh crore at the end of December 2019. Here, the debt-equity mix stood at 76:24. Of this, 93 percent of the debt investments are in AAA and sovereign instruments. SBI Life said that during the period ended December 31, 2019, the insurer has classified its investment in Dewan Housing Finance (DHFL) bonds as NPA on account of default in interest and principal repayment of non-convertible debenture (NCDs) held in unit-linked funds.
RBL Bank Q3 net profit dips 69%
RBL Bank on January 22 reported a 69 percent fall in its Q3 net profit following an increase in the provisions of the company. The company net profit was at Rs 70 crore against Rs 225.2 crore in the same quarter last year. NII rose 40.8 percent at Rs 922.6 crore versus Rs 655.1 crore, YoY.
The company’s loan growth stood at 20 percent YoY and 2 percent QoQ. The net interest margin was at 4.57 percent against 4.31 percent and the provision coverage ratio was at 58.07 percent versus 58.50 percent, QoQ.
PNB Housing Finance reports weak Q3 earnings
PNB Housing Finance on January 23 reported a 21.8 percent de-growth in the third-quarter profit at Rs 297.1 crore YoY with a sharp deterioration in asset quality. The company’s profit was impacted by higher provisions, lower operating income, but supported by lower tax cost. Net interest income (NII) during the quarter grew by 11.8 percent YoY to Rs 566 crore, but loan growth was negative (2.2 percent) with net interest margin at five-quarter low of 2.98 percent.
On the asset quality front, gross non-performing assets (NPA) as a percentage of gross advances increased to 1.75 percent (from 0.84 percent QoQ) and net NPA to 1.44 percent (from 0.65 percent QoQ).
Bank of Baroda posts Q3 loss of Rs 1,407 cr
Public sector lender Bank of Baroda on January 24 posted a loss of Rs 1,407 crore for the quarter ended December 2019. The earnings were dented by higher provisions and weakening asset quality. The bank had reported a profit of Rs 471.25 crore in Q3FY19 and Rs 736.68 crore in Q2FY20. Numbers missed the estimates of an analysts poll conducted by CNBC-TV18 that pegged profit at Rs 645.2 crore for the quarter. Net interest income during the quarter grew by 1.4 percent sequentially (up 50.3 percent year-on-year) to Rs 7,129.05 crore.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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