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Elara Capital is betting on these companies for a robust Q3 performance

Elara said NBFCs are expected to bear the brunt of tightening liquidity, down 18.6 percent YoY, whereas banks would benefit, up 69 percent YoY, due to improving credit deposit ratios and improvement in pricing power, given the stress in the NBFC space.

January 14, 2019 / 02:16 PM IST
 
 
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The December quarter earnings season is expected to be a mixed bag with banks driving performance on a low base, most analysts said.

Analysts are expecting some downgrades to continue after third-quarter earnings. But, according to them, the one positive thing that is going to happen in Q3 is growth in broader space earnings, which is likely to be better than frontline space.

"After analysing coverage universe (162 companies) — 61 largecaps and 43 midcaps — we find that underlying business conditions are improving in favour of midcap companies, with 24 percent sales growth and 26 percent PAT growth versus largecap companies, with 18.7 percent sales growth and 5.7 percent PAT growth," Elara Capital said.

Both large and midcaps are feeling pressure at the operating margin level, as EBITDA margin is likely to contract by 1.5 percent and 7.2 percent for largecaps and midcaps, respectively, it added.