After a strong September quarter, which saw big beats and upgrades, all eyes are on the December quarter earnings that are expected to remain robust, experts said.
Cyclical sectors like metals and cement should lead the December earnings even as healthcare is expected to post another solid set of numbers, they said.
“Metals, cement, healthcare, consumer durables are expected to drive 3QFY21 earnings. Consumer, private banks, automobiles and NBFCs are likely to post flattish earnings YoY. Capital goods, retail and staffing are expected to post a YoY profit decline," Motilal Oswal said in a report
The festival season aided recovery and with India set to begin vaccination drive against the coronavirus on January 16, the demand would sustain further, the report said.
YES Securities expects the December quarter to be better than the previous one. “We expect a 10.4 percent QoQ growth in revenue and 7.8 percent in PAT (ex. financials) on account of improving pace of normalisation of the economy and strong festive demand,” it said.
Here is a list of stocks that brokerages think could see their profit after tax (PAT) double year-on-year in the December quarter:
Brokerage: Motilal Oswal
Ashok Leyland: PAT likely to rise 200%
Motilal Oswal in a report said that the net profit of Ashok Leyland could rise by about 200 percent on a year-on-year basis in the December quarter.
The domestic brokerage firm sees a reasonable QoQ and YoY recovery in M&HCV volumes. Strong growth expected toward FY21-end.
Mahindra CIE: PAT likely to rise 414%
The net profit of Mahindra CIE could rise by more than 400 percent YoY in the December quarter, Motilal Oswal in a report.
The brokerage firm sees demand recovery across key segments in India. Recovery in the EU has been slower than expected due to the second wave of COVID-19.
There is a focus on the company in increasing the share of new orders to drive growth. Margin is likely to expand on a QoQ basis due to operating leverage as well as cost-saving initiatives, said the note.
Dalmia Bharat: PAT likely to rise 500%
Motilal Oswal in a report highlighted that the net profit of Dalmia Bharat could rise by over 500 percent YoY basis in the December quarter.
Dalmia Bharat is the top midcap pick of Motilal Oswal in the cement space. Across India, average cement price has been up 7 percent YoY in 3QFY21, led by a 17 percent increase in South and 6-7 percent in North, Central, and West, even as East was flat.
The domestic brokerage firm estimates volumes at 5.56mt (+9 percent YoY). Realisation to decline by 3.6 percent on a QoQ basis.
Laurus Labs: PAT likely to rise over 200%
The net profit of Laurus Labs could see a 200 percent YoY rise in the December quarter, Motilal Oswal said.
The domestic brokerage firm expects the formulation/API segment to be on a strong growth track with 60%/66% YoY growth for the December quarter. It expects the synthesis segment to grow 25 percent YoY during the quarter.
HPCL: PAT likely to rise about 400%
Motilal Oswal in a report said the net profit of HPCL could rise by about 400 percent YoY basis in the December quarter.
The brokerage firm models in refining throughput at 4.1mmt (flat YoY and QoQ), with reported GRM of USD4.5/bbl. The gross marketing margin for the quarter is expected at Rs 6.7 a litre (up YoY and QoQ for the company).
“We model nil-subsidy sharing and estimate inventory gain of $2.5/bbl for HPCL during the quarter. Concerns of huge capex and execution risk at Vizag prevail but HPCL attractive for its marketing leverage,” it said.
Shree Cement: PAT likely to rise over 100%
The net profit of Shree Cement was likely to see a rise of more than 100 percent YoY in the December quarter, Motilal Oswal has said. Cement industry volumes have continued to recover, led by rural housing and a pickup in government spending (particularly in East and North).
Cement volumes estimated to increase by 14 percent on a YoY basis. The brokerage expects EBITDA at Rs 1,494 (-INR19 QoQ). It also expects realization to decline by 0.2 percent QoQ.
Zensar Technologies: PAT likely to rise over 100%
Motilal Oswal in a report said the net profit of Zensar Technologies could rise by over 100 percent YoY in the December quarter.
It expects a marginal decline in revenue led by continued weakness in its top client. It also expects lower furloughs. Margin will remain in a narrow band and any change in management strategy under the new CEO would be in focus, the note said.
Brokerage: YES Securities
Sanghi Industries: PAT likely to rise 200%
YES Securities in a report said the net profit of Sanghi Industries could rise by over 200 percent YoY in the December quarter.
“We expect volumes at 0.53 MT; growth of 20% YoY led by a weak base and buoyant non‐trade demand in Gujarat market. Realizations should be up 3.6% YoY and flat QoQ. EBITDA/Te at around Rs 923, an improvement of 5% YoY,” the report added.
RBL Bank: PAT likely to rise by over 100%
The net profit of RBL Bank could see a year on year increase of more than 100 percent in the December quarter YES Securities has said.
“Growth to be driven by MFI, cards, and LAP products. Caution in corporate lending to continue. NIM will expand aided by growth mix and a sharp recovery in fee could continue. Provision run rate could increase, particularly for MFI and Cards portfolio,” a report said.
AU Small Finance Bank: PAT likely to rise by over 100%
AU Small Finance Bank could see its net profit grow by more than 100 percent in the December quarter on YoY basis, YES Securities said in a note.
“SBL‐MSME, BB, home loan, and newer products to aid the bank in reporting healthy loan growth. Stake sale in Aavas Housing to generate substantial profits which could be partly utilized for making higher provisions,” said the note.Disclaimer
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