After a stable March quarter, all eyes are on June quarter earnings which will kick off from this coming week. The IT bellwethers will report their earnings for June quarter starting July 13.
Tata Consultancy Services (TCS) is scheduled to report its results for the first quarter of the financial year 2018 on Thursday, July 13, followed by Infosys on Friday, July 14.
The expectations from June quarter earnings are fairly muted. However, few surprises cannot be ruled out. Given the fact that D-Street is entering the season with heightened expectations, some bit of disappointment cannot be not ignored.
“We expect only muted earnings growth for the market as a whole in Q1. However, there will be out-performers and under-performers. But it is important to note that good results need not be accompanied by appreciation in share prices,” Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services told Moneycontrol.
“Even the opposite may be true. If good results are not up to the street expectations, the stocks may face hammering. Similarly, if the poor results are not as worse as market expectations, those stocks may see some rally. This response is likely to play out in Q1 result,” he said.
The market has already discounted poor results from IT and pharma. That’s why they are quoting at very low valuations when the market valuations appear stretched, but private sector insurance majors and some NBFCs will do well, suggest experts.
“We expect the net income of the BSE-30 index to be flat on a year-on-year (YoY) basis. But, we foresee 8 percent YoY decline in the net income for our coverage universe including automobiles (inventory clearing due to GST), downstream energy (lower refining margins and adventitious losses due to recent correction in crude prices), pharmaceuticals (disruption in domestic formulation businesses again due to GST) and telecom (continuation of hyper-competitive sector activity),” Kotak Institutional Equities said in a note.
“We estimate EPS of BSE-30 Index for FY2018E at Rs1,470 and Rs1,833 for FY2019E. Our EPS estimates of Nifty Index for FY2018E and FY2019E are 478 and 586,” it said.
Things might start improving from Q2 but till then markets might stay in a range. The June quarter is unlikely to offer any major surprises but there are few stocks which can give up to 80% growth in net profit on a Year-on-Year (YoY) basis:
Eicher Motors: Net profit likely to grow by over 40% YoY
Edelweiss Securities Ltd expects 44.5 percent YoY growth in net profit to Rs 543.70 crore for the quarter ended June compared to Rs376.30 crore reported in the year-ago period.
Total revenues are likely to increase marginally by 4.6 percent to Rs1957.2 crore compared to Rs1555.7 crore reported in the previous quarter of last fiscal.
“We expect consolidated revenues growth of 27 percent YoY led by volume growth of 25 percent on a YoY basis for Royal Enfield business. We expect operating margins to improve sequentially by ~70bps to 32.1 percent led by benefits of operating leverage,” said the report.
Maruti Suzuki India: Net profit likely to increase by 20.6% YoY
Edelweiss Securities Ltd expects 20.6 percent YoY growth in net profit to Rs1792.50 crore for the quarter ended June compared to Rs1486.20 crore reported in the year-ago period.
Total revenues are likely to decrease by 5.2 percent to Rs17,377.20 crore compared to Rs14927.30 crore reported in the previous quarter of last fiscal.
“We expect revenue growth of 16.4 percent on a YoY basis largely driven by volume growth of 13 percent YoY. We expect operating margins to improve sequentially by 80bps to 14.8 percent driven by lowering of average discounts due to a higher share of new models,” said the report.
Capital First: Net profit likely to increase by 41% YoY
Edelweiss Securities Ltd expects 41.4 percent YoY growth in net profit to Rs63.90 crore for the quarter ended June compared to Rs45.20 crore reported in the year-ago period.
The net interest income and other income are likely to decrease by 1 percent to Rs458 crore compared to Rs338 crore reported in the previous quarter of last fiscal.
“The loan growth will continue to report strong momentum with a continued tilt towards retail segment. The net interest income (NIMs) will benefit from lower funding cost; Asset quality will continue to track benign trends,” said the report.
M&M Financial Services: Net profit likely to increase by 63.6% YoY
Edelweiss Securities Ltd expects 63.6 percent YoY growth in net profit to Rs142.30 crore for the quarter ended June compared to Rs87 crore reported in the year-ago period.
The net interest income and other income are likely to decrease by 9.8 percent to Rs1018.20 crore compared to Rs684.70 crore reported in the previous quarter of last fiscal.
“Disbursement trends are likely to be better (higher single digit YoY); Asset quality performance will be key monitorable; NIMs to get support from lower funding cost,” said the report.
KEC International: Net profit likely to increase by 72%
Edelweiss Securities Ltd expects 72.8 percent YoY growth in net profit to Rs 53.5 crore for the quarter ended June compared to Rs30.9 crore reported in the year-ago period.
Total revenues are likely to decrease by 33 percent to Rs1908.10 crore compared to Rs1784.70 crore reported in the previous quarter of last fiscal.
“We expect 7 percent growth in Q1FY18 with railways and T&D gaining traction and margins are expected to remain healthy at above 8 percent levels. Order intake and working capital levels to remain key monitorable,” said the report.
Suprajit Engineering: Net profit likely to increase 59% YoY
Kotak Institutional Equities expects 59.3 percent YoY growth in net profit to Rs31.30 crore for the quarter ended June compared to Rs10.70 crore reported in the year-ago period.
Total sales are likely to increase by 36 percent to Rs347.30 crore compared to Rs254.40 crore reported in the previous quarter of last fiscal.
"We expect consolidated revenues to grow 37 percent on a YoY basis, led largely by its acquisition of Wescon Controls. Standalone revenues will likely grow by 9 percent on a YoY basis, in line with the growth in the domestic two-wheeler segment's sales," said the report.
TVS Motor Company: Net profit likely to increase by 61% YoY
Kotak Institutional Equities expects 61.6 percent YoY growth in net profit to Rs195.90 crore for the quarter ended June compared to Rs121.30 crore reported in the year-ago period.
Total sales are likely to increase by 25 percent to Rs3600.50 crore compared to Rs2880.90 crore reported in the previous quarter of last fiscal.
“The volumes grew by 12 percent on a YoY basis, led by strong growth in scooter volumes and some pickup in bike volumes,” said the report.
The revenues will likely grow by 25 percent on a YoY, led by (1) price increases following the implementation of BS-IV fuel standards and (2) better product mix.
Dalmia Bharat: Net profit likely to increase by 84.5% YoY
Kotak Institutional Equities expects 84.5 percent YoY growth in net profit to Rs173.40 crore for the quarter ended June compared to Rs94 crore reported in the year-ago period.
Total sales are likely to increase by 17.7 percent to Rs2078.20 crore compared to Rs1765.40 crore reported in the previous quarter of last fiscal.
“We model 10 percent YoY growth in the consolidated sales volumes to 4.1 mn tons. We expect subdued volumes at OCL India,” the report added.
ABB: Net profit likely to increase by 30% YoY
Kotak Institutional Equities expects 30.8 percent YoY growth in net profit to Rs101.20 crore for the quarter ended June compared to Rs77.40 crore reported in the year-ago period.
Total sales are likely to increase by 12.7 percent to Rs2367.60 crore compared to Rs2101.50 crore reported in the previous quarter of last fiscal.
“We expect steady growth in Robotics and Motion, led by railway ordering as well as Power Grids led by government spending on T&D infra. Overall, growth will moderate on account of initial disruption from GST,” said the report.
L&T: Net profit likely to increase by 62% YoY
Kotak Institutional Equities expects 62.7 percent YoY growth in net profit to Rs991.6 crore for the quarter ended June compared to Rs609.6 crore reported in the year-ago period.
Total sales are likely to increase by 4 percent to Rs22,818.60 crore compared to Rs21,873.80 crore reported in the previous quarter of last fiscal.
“We expect a modest mid-single digit growth net of good growth print in heavy engineering and hydrocarbon segments and weakness in infrastructure and E&A segments,” said the report.
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