Our analysts forecast an earnings growth of 8% YoY for September quarter for 168 companies under our coverage (ex OMC) after 7 consecutive quarters of contraction. This is largely on account of Cyclical sectors (Auto +39%, Cement +68%, Resources + 33% and Power +33%). Banking results to have good treasury gains, retail lenders to do well, slippages to moderate sequentially; however ageing of NPAs to keep credit costs elevated. Telecom: Higher interest and amortisation due to accelerated data roll-outs to impact earnings.
Revenue growth expected at 5% YoY. This is the third consecutive quarter of growth, after 4 quarters of decline. Double digit growth expected in Auto (TAMO, Hero, Maruti)Pvt Banks with retail focus to see buoyant growth. Decreasing cost of funds to support NIMs for NBFCs. Top-line also expected to be strong for Pharma mainly in Aurobindo, Lupin, Glenmarkand Cadila.
EBITDA margin to expand ~100 bps YoY driven by Cement on lower cost, while commodity price rebound helps Resources. Gas utilities’ margins to expand on the back of YoY decline in LNG prices, while dip in fuel cost helps power cos. However, margins to remain muted for FMCG, IT, Pharma and Telecom.
Expectations from Sensex companies: Earnings to grow at 8% YoY. However, excluding BFSI earnings to grow at 17% YoY.
~70% of earnings growth to be driven by the Tata Group. BFSI to degrow YoY mainly due to higher credit costs (though sequentially growing, as the hump of provisioning seems to be behind)
Tata Steel (Loss to profit), GAIL, TAMO, Maruti, Cipla, Lupin and PGCIL likely to report highest YoY earnings growth, while Dr Reddy’s, State Bank and ICICI Bank may post sharpest YoY earnings declines.