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26 Aug, 2025 12:21

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Moody's downgrade of India's outlook to "negative" from "stable" over growth concerns saw the market end the week with moderate gains.

Improved earnings, government’s measures for the real estate sector and easing of trade tensions between the US and China saw the market move steadily through the week but most of the gains were erased after Moody's November 8 outlook.

The same day, the Sensex touched a fresh all-time high of 40,749.33, while a day earlier, the Nifty closed above 12,000 for the first time since June 4, 2019. The Nifty Bank index also touched 31,000 levels for the first time since July 8.

Foreign Institutional Investors (FIIs) remained net buyers during, as they bought equities worth Rs 3,204.93 crore, while Domestic Institutional Investors (DIIs) sold equities worth of Rs 4431.27 crore.

The Sensex rose 158.58 points (0.39 percent) to end at 40,323.61, while the Nifty added 17.55 points (0.14 percent) ended at 11,908.15 in the week ended November 8.

Foreign brokerage house CLSA feels that the operating leverage benefit should continue in FY20 and capacity constraints for APIs could start the return of capex, while the return of capex may negate operating leverage benefit.

The significant reduction in tax rate guidance drives a 10-18 percent increase in FY20-22 EPS estimates, it added.

CLSA remains concerned over delays in the US resolution, while the punchy valuation of 22/19x FY20/21 leaves limited room for negative surprises.

The company's Q2 consolidated net profit rose 63.3 percent at Rs 193.5 crore versus Rs 118.5 crore, while revenue was up 26.9 percent at Rs 1,284 crore versus Rs 1,012 crore, YoY.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was up 52.5 percent at Rs 266 crore, while EBITDA margin was up 350 bps at 20.7 percent, YoY.

According to Kotak Institutional Equities, cyclical segments impact profitability, while the outlook remains challenging.

Weak quarter impacted by domestic business and cyclical oil and gas segment.

Kotak has cut FY2020-22 EPS estimates by 9-11 percent and see a steep slowdown in cyclical business as a key risk. The revenue trajectory will remain under pressure.

The company registered a 7.6 percent year-on-year growth in the second quarter (July-September) profit at Rs 245 crore from Rs 227.5 crore in the same period last year.

Revenue fell sharply by 25 percent year-on-year to Rs 1,259.4 crore, as domestic business degrew 35.6 percent YoY.

Exports also dropped 18.1 percent YoY to Rs 772.5 crore in the September quarter due to lower oil and gas revenues.

The company has reported 24 percent YoY decline in EBITDA led by weak volume growth, while significant cost increase and economy slowdown led to a decline in RE volumes, said Kotak Institutional Equities.

The broking house expects volume pressure to persist in FY21 due to shift to BS-VI engines. Compliance costs headwind and demand slowdown will lead to margin pressures.

The company has posted 18.5 percent YoY jump in its Q2FY20 net profit at Rs 570.5 crore versus Rs 481.4 crore, while revenue was down 9.2 percent at Rs 2,181.9 crore versus Rs 2,404.1 crore.

Other income was up at Rs 145 crore, while tax expense stood at Rs 28.8 crore.

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