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Budget 2023
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Q1FY22 review: Top 10 plays on digitization and demand recovery

Amongst sectors, cement, metals and gas companies have reported better-than-expected results while banking, automobiles, FMCG and IT have reported results in line with expectations.

August 14, 2021 / 01:26 PM IST

Out of 700 companies' quarterly results, the median revenue growth is 47 percent on a YoY basis. The net margins of the companies have been reported as median of 8.2 percent with profit before depreciation, interest and tax (PBDIT) margins of 19.2 percent.

Nifty EPS is expected to get downgraded marginally. We expect Nifty EPS for FY22 at Rs 699. Revenues for companies were impacted by severe lockdowns while margins were impacted by higher commodity prices and supply chain issues. Amongst the sectors, Cement, Metals and Gas companies have reported better-than-expected results while Banking, Automobiles, FMCG and IT have reported results in line with expectations. Pharmaceutical companies and Private Banks have reported results worse-than-expectations.

IT companies both large and Mid cap ones reported strong revenues driven by healthy pipelines. Positive Management commentaries regarding deal pipelines on the digital front and cloud migration focus by companies provides long term high visibility for growth in companies. We prefer Infosys, TCS, and Tata Elxsi in this space. At the same time, we need to keep an eye on increased revenues for internet-based businesses like IndiaMART InterMESH, Matrimony.com, and Nazara Technologies where revenues are expected to grow manifold driven by organic and inorganic growth.

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