Kotak Institutional Equities in a note highlighted that on a YoY basis, it expects net profits of the BSE-30 Index to decline 1.3 percent and that of the Nifty-50 to increase 0.6 percent
The June quarter results were not as bad as analysts had estimated which cemented hopes of a recovery in the September quarter, thanks to a series of unlocking measures being unveiled by the central and state governments.
The 2QFY21 has been characterised by improving data points on multiple fronts. COVID infections have started tapering off toward the end of the quarter and economic activity has picked up, Motilal Oswal said in a note.
The pent-up demand and inventory filling ahead of the festive season is helping the underlying recovery along with monsoon which has been widespread.
“September quarter earnings can turn out to be better than expectations, given the situation that the world has undergone. Many companies have come back to almost 70-90% utilisation levels quickly,” Atul Bhole, Senior Vice President – Investments, DSP MF told Moneycontrol.
Kotak Institutional Equities in a note highlighted that on a YoY basis, it expects net profits of the BSE-30 Index to decline 1.3 percent and that of the Nifty-50 Index to increase 0.6 percent.
“We estimate ‘EPS’ of the BSE-30 Index at Rs1,555 for FY2021 and Rs2,028 for FY2022 and of the Nifty-50 Index at Rs453 for FY2021 and Rs606 for FY2022,” the note added.
Here is a list of top 10 companies that could more than double their profit on a year-on-year basis in the September quarter. The list has been collated from various brokerage estimates:
Brokerage Firm: Motilal Oswal
Motilal Oswal sees CEAT reporting more than 100% YoY rise in the net profit to Rs 103.4 crore for the quarter ended September. The brokerage firm sees a very strong recovery in the aftermarket, coupled with OEM recovery are some of the factors that will drive 2QFY21 performance.
The ramp-up at the new TBR/PCR plant to support demand recovery. Impact of natural rubber inflation to reflect in 3QFY21, said the note.
Motilal Oswal sees Thermax reporting 147% YoY growth in the net profit to Rs 63 cr for the quarter ended September 2020 helped by the lower tax rate. Investors should also watch out for demand outlook across segments, as well as various end markets.
The brokerage firm is of the view that the Energy/Environment segment to decline 20%/10% YoY, Chemical segment to grow 10% YoY.
Motilal Oswal sees Dalmia Bharat reporting 558% YoY growth in the next profit to Rs 177 crore. Volumes to rise by about 7 percent on a YoY basis. The brokerage firm expects EBITDA/t at INR1,204.
Motilal Oswal sees India Cement reporting over 900% YoY growth in the net profit for the quarter ended September 2020, but volumes could decline by about 25 percent YoY to 2.00 mt due to higher exposure to the South and Maharashtra region.
2QFY21 is seasonally the weakest quarter of the year due to heavy monsoon rains across most parts of the country. Accordingly, we have seen cement demand decline on a mom basis since July even this year.
However, on a YoY basis, the demand recovery seen in June has sustained even in this quarter which is positive for the sector outlook.
Motilal Oswal sees UltraTech Cement reporting 104 percent YoY growth in the net profit to Rs 1181 cr for the September quarter. It is also the top pick of the brokerage firm in the cement space.
UltraTech’s margins are expected to improve, driven by the (a) turnaround at its acquisition (Century assets), and (b) setting up of new WHRS capacities to reduce power consumption.
Debt is also expected to decline sharply over the next two years as there is a negligible planned capex. It is also trading at 11.0x FY22E EV/EBITDA – a 15% discount to its 10-year average as well as a 35% discount to peer Shree Cement (v/s historical average of 10%), said the note.
Motilal Oswal sees Laurus Lab reporting 233% YoY growth in the net profit to Rs 183 cr for the quarter ended September. The formulation/Synthesis segment is likely to drive 49 percent YoY growth in revenue for 2QFY21.
Motilal Oswal expects the API segment to grow by 24 percent YoY for 2QFY21. Investors should watch out for update on new molecule additions in the API segment.
Brokerage Firm: Kotak Institutional Equities
Kotak Institutional Equities expects the net profit to grow by 547% YoY. It expects a PPOP growth of about 15 percent YoY with an NII growth at 12 percent YoY partly aided by operating leverage.
The loan growth could well slow to ~6 percent but NIM (core) or net interest margin is likely to remain stable on a QoQ basis at 3.7 percent.
We expect provisions to remain high but lower than the previous quarter as we don't see the bank making the same quantum of contingent provisions as we saw in 1QFY21, said the Kotak note.
The brokerage firm expects the focus to remain on the expected restructuring by 4QFY21. “We are building slippages of 1.8% but would be contingent on the court ruling on NPL recognition for the quarter,” it said.
Kotak Institutional Equities expects Hindalco Industries to almost double its PAT in the September quarter. It estimate India EBITDA (standalone + Utkal) at Rs14.2 bn (+32% yoy, +59% qoq) due higher volumes in aluminum (-6% yoy, +2% qoq) and higher volumes in copper (-11% yoy, +83% qoq) on improved demand post easing of lockdown restrictions.
Kotak Institutional Equities expects HPCL to report an adjusted PAT of HPCL could almost double on a YoY basis for the September quarter.
“We assume (1) normalized refining margins to improve to US$2/bbl (+US$2.9/bbl QoQ), (2) crude throughput to remain steady at 4 mn tons and (3) domestic sales volumes to decline 11% YoY to 8 mn tons,” said the note.
Kotak Institutional Equities expects IOC to report nearly 300 percent YoY growth in the net profit for the September quarter.
“We assume (1) normalized refining margins to decline to US$2.5/bbl (-US$1.9/bbl QoQ), (2) crude throughput to increase 12% QoQ to 14.5 mn tons and (3) domestic sales volumes to decline 13% YoY to 17.6 mn tons,” said the note.
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