Experts say that there is a possibility double-digit earnings growth could be seen after the September quarter.
We are in the midst of earnings season with some top names having already announced their June quarter numbers. IT majors Infosys and Tata Consultancy Services have announced their Q1 numbers. Apart from Infosys and IndusInd Bank which reported a 38 percent jump in net profits, there was hardly any other stock which created an impact. YES Bank, Federal Bank, Mindtree, Wipro, DCB Bank disappointed the Street.
“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.
The June quarter is likely to mimic the March quarter with financials leading the growth while consumer discretionary, consumer staples, Industrials, material, and real estate could well post declining trend sequentially in the top-line growth.
However, experts say that there is a possibility double-digit earnings growth could be seen after the September quarter.
Sectors like auto and auto ancillaries, consumer discretionary and FMCG will get affected by demand slowdown.
Here's a sneek peak into the top companies which have declared June quarter numbers:
Infosys: Profit falls 6.8 percent
Infosys' June quarter profit fell 6.8 percent sequentially but raised its full-year constant currency revenue guidance to 8.5-10 percent. Profit for the quarter ended June stood at Rs 3,802 crore, down from Rs 4,078 crore in March quarter.
Revenue in rupee terms grew by 1.2 percent quarter-on-quarter to Rs 21,803 crore, the company said in its BSE filing.
Overall numbers are largely in line with analyst estimates. A CNBC-TV18 poll estimates for profit were at Rs 3,702 crore on revenue of Rs 21,776 crore. The dollar revenue is estimated at USD 3,134 million and the constant currency revenue growth at 2.8 percent for the quarter ended June.
Brokerages also raised the price target on the stock, saying the risk-reward is favourable and guidance revision alluded company's confidence in its pipeline and large deal wins.
Tata Consultancy Services: Slow growth surprises industry watchers
TCS reported 0.06 percent sequential growth in the net profit to Rs 8,131 crore for the quarter ended June 30, higher than CNBC-TV18 poll of Rs 7,820 crore. Year on year (YoY), the profit grew at 10.78 percent. The rupee revenue grew 0.4 percent QoQ to Rs 38,172 crore for the quarter ended June, slightly lower than CNBC-TV18 poll of Rs 38,506 crore. YoY, the revenue growth was at 11.4 percent.
TCS Q1 FY20 dollar revenue stood at USD 5,485 million, up 8.6 percent on a YoY basis. The operating margin stood at 24.2 percent while the net margin for the came at 21.3 percent. The FY19 operating margin for TCS stood at 25.1 percent.
Reliance Industries: Profit, revenue beat estimates, Jio rises 6 percent
Reliance Industries reported a consolidated profit after tax of Rs 10,104 crore for the June quarter, up 6.8 percent from a year ago. The net profit also beat a poll of analysts conducted by CNBC-TV18 which had pegged the profits at Rs 9,852 crore. The profit tax, however, was down 2.5 percent when compared to the March quarter number of Rs 10,362 crore.
Consolidated net revenue grew by 13.2 percent from a quarter ago to Rs 1.57 lakh crore, which was much higher than CNBC-TV18 poll estimates of Rs 1.43 lakh crore. The consolidated profit grew 22 percent YoY.
"First quarter earnings were strong despite weak global macroeconomic environment and challenging hydrocarbon market conditions," Mukesh D. Ambani, Chairman and Managing Director, said.
Reliance Jio registered a healthy growth with profit growing 6.1 percent sequentially to Rs 891 crore. It also reported a subscriber base of 331.3 million in the first quarter against analyst expectations of 306.7 million. The subscriber base was 332.5 million in the quarter ended March.
Wipro: Margin beats estimates
Wipro Q1 numbers beat analyst estimates, but global brokerages remained bearish on the stock and slashed price target after subdued growth in Q1FY20, as operating profit margin in Q1 was a beat.
The company's IT services business missed analyst expectations falling 1.6 percent sequentially to Rs 14,351.4 crore. IT services revenue in dollar terms fell 1.76 percent sequentially to $2,038.8 million in Q1FY20 while after adjustment with respect to divestment, dollar revenue fell 1.3 percent and constant currency revenue slid 0.7 percent QoQ.
Jefferies has an underperform rating on the stock has cut the target to Rs 225 from Rs 245 while Citi has a sell rating and has also cut target to Rs 250 from Rs 255. Credit Suisse has an underperform rating and has a target of Rs 240.
Bajaj Consumer: Profit rises 8.9 percent
Consolidated net profit grew 8.9 percent to Rs 56.7 crore in June quarter, against Rs 52.1 crore in the same period in 2018.
Revenue from operations during the quarter increased 7.6 percent to Rs 240.7 crore compared to the corresponding period previous fiscal, the consumer goods company said in its BSE filing.
Federal Bank Q1: Beats estimates
Private sector lender Federal Bank's June quarter profit grew sharply by 46.2 percent YoY to Rs 384.2 crore despite provisions remained elevated and asset quality weakened. Higher other income and operating profit boosted earnings. Profit in same quarter in 2018 was Rs 262.7 crore.
Numbers were better than analyst estimates. A CNBC-TV18 poll estimates for profit were Rs 358.5 crore and NII Rs 1,135.5 crore for the quarter.
Asset quality weakened a bit in June quarter. Gross non-performing assets as a percentage of gross advances increased to 2.99 percent, from 2.92 percent in previous quarter and net NPAs, too, were higher at 1.49 percent against 1.48 percent on sequential basis.
IndusInd Bank: Profit jumps 38 percent
Private sector lender IndusInd Bank reported healthy growth in June quarter earnings following merger with Bharat Financial Inclusion. The net profit of the merged entity stood at Rs 1,432.5 crore for the quarter ended June, rising 38.3 percent compared to Rs 1,036 crore in the corresponding period last year.
The net interest income, the difference between interest earned and interest expended, grew by 34 percent to Rs 2,844 crore YoY, with loan growth at 28 percent.
While addressing a press conference, MD & CEO, Romesh Sobti said stressed assets at the end of June quarter stood at 1.67 percent against 1.9 percent in the previous quarter. "We see recoveries from special purpose vehicles of IL&FS and should see the outcome of IL&FS recovery efforts in a few months."
Dabur India: Better-than-expected growth across parameters
FMCG major Dabur India reported better-than-expected growth across parameters in June quarter registering domestic volume growth at 9.6 percent against analyst estimates of 4 percent. Profit grew by 12.6 percent to Rs 363.1 crore in Q1 despite one-time loss of Rs 20 crore.
The company registered a 9.3 percent growth in revenue at Rs 2,273.3 crore for the quarter ended June, against Rs 2,080.7 crore in the corresponding period last fiscal.
Prabhudas Lilladher has recommended a hold rating on the stock with target price of Rs 437 per share.
ACC: Better than expected numbers
Shares of cement major ACC rallied 5 percent on July 19 after reporting better-than-expected earnings for the quarter ended June. Most brokerage houses have remained bullish on the stock and expect the stock to return more than 30 percent.
The cement maker reported a solid 39 percent YoY growth in June quarter profit at Rs 456 crore and 7.8 percent growth in revenue from operations at Rs 4,152 crore.
CLSA maintained buy call on the stock and increased price target to Rs 2,050 from Rs 2,000 earlier after EBITDA expanded to an eight-year high & in four digits in Q2 while Citi maintained its buy call on the stock with a target price at Rs 2,175 per share as second quarter earnings beat its expectations with EBITDA per tonne coming a seven-year high, though volumes & pricing partly offset by higher costs.
Cyient: Profit jumps 10% but misses estimates
Cyient on July 18 posted a 9.7 percent rise in net profit at Rs 90.5 crore for the June quarter. The Hyderabad-based company had posted a net profit of Rs 82.5 crore in the corresponding quarter in 2018. Its revenue increased marginally to Rs 1,089 crore in April-June quarter as against Rs 1,080 crore in the year-ago period. However, on a sequential basis, the revenue declined by 6.4 per cent from Rs 1,162.9 crore.
YES Bank: Brokerages stay neutral
Yes Bank turned the corner sequentially in June quarter with the Rs 113.76-crore standalone profit against the loss of Rs 1,506.64 crore in the previous quarter due to sharp fall in provisions. The net interest income during the quarter grew 2.8 percent YoY to Rs 2,281 crore with muted loan growth of 10.1 percent. However, on a sequential basis, NII and loan book was down 9 percent and 2.2 percent in Q1.
Credit Suisse maintained its neutral rating but reduced its target price to Rs 94 from Rs 205 earlier. Nomura has a neutral rating on the stock and has cut target to Rs 110 from Rs 230 earlier.
DCB Bank: Q1 earnings disappoint
DCB Bank reported weak performance in the first quarter of FY20. Broader numbers showed a miss on many counts – margins, growth and asset quality. Q1 FY20 net profit growth decelerated to 16 percent YoY, mainly after lower advances growth and higher slippages.
With a balance sheet size of Rs 36,282 crore as of June-end, DCB is a small-sized private bank. Hence, the bank must grow higher than the industry to remain relevant and gain scale.
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