The net profit in the December quarter is likely to be led by the BFSI segment, followed by the automobile space, and consumer space which is a beneficiary of tax cuts.
Indian indices might have hit an all-time high in December but any record high in terms of earnings growth is still some time away. The December quarter earnings will at best be ‘muted’, according to analysts at top brokerage firms.
The Nifty 50 hit a record high on December 20 and rose about 12 percent for the year 2019 at a time when economic growth momentum decelerated, and corporate earnings remained tepid.
“CY19 turned out to be a year where the markets got further polarized in terms of both earnings and performance. While the Nifty delivered 12 percent returns, the Nifty Midcap-100 and Nifty Smallcap-100 were down 4 percent and 9 percent, respectively,”
“Corporate tax cuts have prevented a further slide in earnings estimates. Nonetheless, the FY20 corporate earnings story is all about financials, with Nifty ex-BFSI earnings expected to decline 2% for the year. The upcoming earnings season will likely mark one more quarter of muted earnings,” it said.
The net profit in the December quarter is likely to be led by the BFSI segment, followed by the automobile space, and consumer space which is a beneficiary of tax cuts.
However, metals as well as oil & gas are likely to drag the performance, given the underlying weak commodity prices. Telecom is expected to sharply reduce losses on a YoY basis, which will support earnings, said a report.
“We expect YoY double-digit growth for most of the sectors except for media, metals & mining (decline in realizations on a YoY basis) and transportation sectors,” sources said.
“We expect net profits of the BSE30 Index to grow 23% YoY while that of Nifty-50 Index to increase 21% YoY. We estimate ‘EPS’ of the BSE-30 Index at Rs 1,746 for FY20 and Rs 2,200 for FY21 and of the Nifty-50 Index at Rs 532 for FY20 and Rs 680 for FY21,” it said.
Here is a list of top 10 stocks that are likely to more than double net profit on a year-on-year (YoY) basis in the December quarter:
The INR appreciation of 1.2 % YoY against the USD can potentially have a positive impact on earnings of Blue Star due to their reliance on imports of the compressor and indoor units from China, said the report.
- Birla Corporation: PAT likely to grow 230% YoY to Rs 90 cr
- Laurus Labs: PAT likely to grow 157% YoY to Rs 45 cr
- Strides Pharma: PAT likely to grow 136% YoY to Rs 56 cr
- BPCL: PAT likely to grow 124% YoY to Rs 1,111 cr
- Brokerage Firm: Kotal Institutional Equities
- Timken India: PAT likely to grow 182% YoY
- Bandhan Bank: PAT likely to grow 109% YoY
- Bank of Baroda: PAT likely to rise 292% YoY
- Karur Vysya Bank: PAT likely to rise 147% YoY
- Punjab National Bank: PAT likely to grow over 400% YoY
