Short Call | Earnings downgrades loom; Mahindra Holidays shows pricey valuations, Delhivery delivers in Q3, SBI, Amara Raja in focus

The earnings season has not gone as well the Street was expecting.

Indices hit a fresh high yet again on Friday, but there are signs of the market struggling to hold the higher ground. With the Budget behind and the earnings season in its final leg, bulls are on the lookout for fresh stories. The earnings season has not gone as well the Street was expecting. The growing view is that there could be some serious earnings downgrades coming up. January auto sales were a mixed number, but the strength in passenger vehicles was mainly due to companies pushing stock on to dealers, say analysts. Commercial vehicle sales growth shows signs of cooling.

At the global level, Fed chair Jerome Powell reiterated in an interview to 60 Minutes that the central bank was in no hurry to cut rates and that there would be fewer rate cuts in 2024 than the market was expecting.

The agrochem company's December quarter results missed analyst estimates

Bull argument: Valuations undemanding. FIIs increased stake in last quarter. Latin America business  doing better.

Bear argument: Street wary about the company's mounting debt. Stock set to exit Nifty 50 soon. No signs of a strong demand recovery in agrochemicals

MD Anish Shah told CNBC-TV18 that the group plans to make big

investments in Mahindra Holidays.

Bull argument: Company a strong brand in the premium timeshare space. As the economy prospers, an increasing number of affluent people will be willing to spend more on holidays. Company has the best properties in key tourist destinations.

Bear argument: For a company with such a high brand recall and a stock trading at 96 times trailing earnings, the growth in topline and bottomline has been nothing spectacular. Stock has rallied nearly 4-fold from pandemic lows, but has not delivered meaningful return for long term investors.

The logistics major reported profits at the operating level as well as net level for the December quarter

Bull argument: The company has turned corner, so a re-rating of the stock likely.

Bear argument: Need to see if the numbers can sustain. Q3 is usually strong because of the festive season.

The Q3 net profit fell 35 percent and net interest income missed estimates

Bull argument: Bank’s gross and net non performing assets fell to 2.42 percent and 0.64 percent from 3.14 percent and 0.77 percent respectively. Valuations reasonable at less than two times book value as stock has not performed in a while now.

Bear argument: Bank’s employees will get a wage hike of 17 percent as per new agreement, higher than previously planned 14 percent, squeezing profit margins.

Amara Raja gained nearly 2 percent after reporting a 15 percent rise in consolidated net profit for Q3FY24.

Bull argument: Operating profit was ahead of analyst estimates. Outlook on electric vehicles strong. Investment for technological up-gradation in the lithium ion project for 2W/3W batteries progressing as per schedule.

Bear argument: Stock has been a poor wealth creator for long term shareholders.