The June quarter earning is likely to mimic the March quarter's with financials leading the growth while consumer discretionary, consumer staples, industrials, material and real estate could post declining trend sequentially in the top-line growth.
“Given all the growth concerns, expectations have already been beaten down and we expect companies to largely deliver in line with consensus,” Vipin Khare, Director of Research, William O'Neil India told Moneycontrol.
However, experts say that there is a possibility double-digit earnings growth could be seen after the September quarter.
“The subdued economic activity is likely to have affected revenue growth. Additionally, revenue may be affected by the ongoing inventory correction. Both of these factors will also impact margins and thus net profit growth,” Karvy Stock Broking said in a report.
“While earnings may be subdued in Q1FY2019-20, we believe that earnings cycle should bottom by Q2FY2019-20 and improve from thereon,” it said.
For the quarter, consensus expects Nifty index constituent revenues to grow 7.4 percent; EBITDA to grow 10.4 percent and EPS to grow 29 percent.
Sectors like auto and auto ancillaries, consumer discretionary and FMCG will get affected by demand slowdown.
We have collated a list of 10 companies that may report a loss based on estimates of Motilal Oswal and Kotal Institutional Equities:
Brokerage Firm: Motilal Oswal
Tata Motors: Loss likely to be Rs 1,183 crore
Consolidated revenues are estimated to decline 15 percent YoY that would result in a net loss of Rs 1,183 crore in 1QFY19 compared to a net profit of Rs 2,140 crore in the year-ago period.
Motilal Oswal expects the JLR’s (including JV) volume to decline 15 percent YoY and the net realization is also expected to decline 1.6 percent YoY. JLR’s EBITDA margin would expand by 80bps YoY, it said.
The domestic brokerage firm slashed FY20 consolidated PAT by 3.7 percent but increased FY21 PAT estimates by 2.3 percent. The stock trades at 12.2x/10.5x FY20/21E EPS.
Bharti Airtel: Net Loss likely to be Rs 1,014 crore
Motilal Oswal expects the consolidated revenue and EBITDA to remain flat QoQ. It expects the net loss to be Rs 1,014 crore for the June quarter. The stock trades at an EV/EBITDA of 10x FY20E and 9x FY21E.
India wireless revenue is likely to grow 1.1 percent QoQ, as the benefits of the ARPU uptick (from the rollout of minimum recharge plans) will outweigh the decline in subscribers.
India wireless EBITDA too is expected to decline 10 percent QoQ to Rs 2,490 crore. The domestic brokerage firm expects India wireless ARPU to grow 2 percent QoQ.
Vodafone Idea: Net Loss likely to be Rs 3,840 crore
Motilal Oswal expects revenue to remain flat QoQ at Rs 11,880 crore, as an uptick in ARPU will be largely offset by the decline in subscriber base and revenue dilution from IUC (interconnect usage charge). The net loss is likely to be Rs 3,840 crore.
The brokerage firm expects 3 percent QoQ growth in ARPU and EBITDA growth at a modest pace of 6 percent QoQ mainly on the back of merger synergies.
Punjab National Bank: Net loss likely at Rs 196 crore
Motilal Oswal expects the loan growth to come in at 12 percent YoY and deposit to grow at 9 percent in the same period.
The net interest income (NII) growth is expected to decline 8 percent YoY, and the margins are estimated to remain at ~2.5 percent.
The good news is that the stress addition is likely to decline to 4.1 percent (annualised) but remain elevated. The public sector bank is expected to report a net loss of Rs 196 crore. The stock trades at 0.8x FY21E BV.
Future Consumer: Net Loss likely to be Rs 20 lakh
Motilal Oswal expects Future Consumer’s consolidated sales to grow at 30 percent YoY to Rs 1,090 crore, driven by centre of plate portfolio due to a low base, but the company could report a marginal net loss of Rs 20 lakh for the June quarter.
Brokerage Firm: Kotak Institutional Equities
ICICI Bank: Net loss likely to be Rs 119 crore
Kotak Institutional Equities expects the core earnings (base quarter had stake sale gains of ICICI Life) trajectory to remain strong at 15 percent YoY, led by healthy loan growth (~15 percent YoY) and better NII growth (19 percent YoY).
However, net interest margins (NIM) will decline QoQ by 10 bps due to lower one-offs. Credit costs will decline QoQ led by lower slippages. Below-investment-grade portfolio would decline QoQ and coverage ratio would improve sequentially but the bank may report a loss of Rs 119 crore in June quarter.
State Bank of India: Net loss likely to be Rs 4,875 crore
Kotak Institutional Equities expects the loan growth at 12 percent YoY and the net interest margins (NIMs) to remain unchanged QoQ at 2.9 percent.
The Non-interest income growth will be higher due to higher treasury income and income from written-off loans.
The domestic brokerage firm expects the slippages at 1.6 percent of loans as recognition of large accounts is complete while gross NPLs could decline led by higher write-offs. Provisions would be high due to the ageing of NPLs. RoE recovery would be a key monitorable.
HCG: Net loss likely to be Rs 3.4 crore
Kotak Institutional Equities expects revenues to increase 16 percent YoY, led by 10 percent YoY growth in mature centres along with ramp-up of newly set up facilities.
The domestic brokerage firm expects the EBITDA margin to increase 40 bps QoQ to 12.9 percent as losses from new centres will likely decline modestly.
The company could report a net loss that is likely to narrow in June quarter to Rs 3.4 crore from Rs 8.7 crore earlier.
Narayana Hrudayalaya: Net loss likely to be Rs 4.1 crore
Kotak Institutional Equities expects the revenues to increase 18 percent YoY, driven by (1) 12 percent YoY growth in mature hospitals, (2) higher contribution from new hospitals at Mumbai, Gurugram and Dharmshila and (3) Cayman revenues growing 55 percent YoY on a low base.
The domestic brokerage firm expects the EBITDA margin to improve 400 bps YoY to 11.3 percent, led by (1) strong performance at Cayman versus nil EBITDA in 1QFY19, and (2) new hospitals gradually ramping up.
On a sequential basis, Kotak expects modest 40 bps decline in EBITDA margins as Q1 is relatively weaker seasonally versus Q4. On an overall basis, the company is likely to report a net loss of Rs 4.1 crore in the June quarter compared to a profit of Rs 37 crore in March quarter.
Tata Communications: Net Loss likely to be Rs 58 crore
Kotak Institutional Equities expects Tata Communications to report a strong quarter. The EBITDA is likely to post a growth of 19 percent on a YoY basis. The net loss is likely to contract to Rs 58.5 crore in Q1 compared to Rs 199.5 crore reported in the March quarter.
The domestic brokerage firm expects robust momentum in traditional services along with a better margin profile for growth and innovation services.
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