Though many corporate lenders like SBI, other PSUs, Axis Bank etc have still not reported their earnings and we have to wait for the top management commentary before we finally stamp this view of ours.
Earnings growth momentum remains intact so far in Q1FY19 earnings season. Last week, L&T, ITC, and Dr Reddy’s Laboratories reported better than consensus profits while Maruti Suzuki, Yes Bank, Hero Motocorp reported numbers along the estimates.
Till now, 56 percent weights of Nifty companies have already declared their results and these 56 percent companies have 30 percent contribution to the projected Nifty EPS for FY19. Out of the results declared so far, 13 out of 22 Nifty companies have declared results better than expectations. This is hinting of reversal of earning downgrades that we have been witnessing for past 12-13 quarters.
Two major takeaways are-
1. Automobiles have lost on margins owing to sharp run-up in metal prices and change in product mix towards better volumes coming from entry-level brands.
2. Canara bank results and earnings call hinted that provisions have peaked and resolutions of NCLT cases would trigger write back and consequently there will be optically higher profit growth for many of the corporate lenders. After rising NPA cycle, Canara Bank has shown decent recovery & upgradation of Rs 4,208 crore during 1QFY19.
Though many corporate lenders like SBI, other PSUs, Axis Bank, etc. have still not reported their earnings and we have to wait for the top management commentary before we finally stamp this view of ours. On the contrary, ICICI Bank has declared higher slippages than expected.
In the coming week, Adani Ports, Axis Bank, HDFC, Indiabulls Housing, ONGC, Power Grid, Sun Pharma, Tata Motors, Tech Mahindra, Titan, UPL and Vedanta will be declaring their results. These 12 Nifty companies have an aggregate weight of 19 percent. Key results to track are those of ONGC, Tata Motors, Axis Bank and HDFC.
Key trackables are-ONGC- Volume growth
Tata Motors- Forex hedging losses, outlook on new launches
Axis Bank- Slippages and trend in BB stress pool and positive movement in NIM
HDFC- Margins, IndAS impact and loan growthDisclaimer: The author is Head of Research at Narnolia Financial Advisors. The views and investment tips expressed by investment expert 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.The Great Diwali Discount!
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