While aggregate sales for Nifty50 companies is expected to jump 16-20 per cent in March quarter, the highest in nine quarters, various estimates project aggregate profit growth of 65-110 per cent for the quarter.
At least a dozen Nifty50 constituents may log doubling of profits for the quarter, with metals producers, automobile makers and private banks expected to contribute 62 per cent to the incremental revenues, analysts said.
Motilal Oswal projects
to report a 456 per cent jump in March quarter profit at Rs 7,700 crore while is projected to log 286.5 per cent profit growth at Rs 4,000 crore. Steel makers are seen logging higher spreads because of better realisation and higher volume.
Motilal Oswal’s projections for March quarter
Edelweiss said it would be a second successive salubrious quarter for ferrous metal players with improvement across all fronts. “In the wake of low capex intensity for most ferrous companies, we believe debt reduction is in store,” it said.
to report a 322 per cent profit growth for Q4 at Rs 5,200 crore and IndusInd Bank’s 181 per cent at Rs 900 crore. State-run SBI is also projected to double profit in fourth quarter at Rs 7,700 crore (up 114 per cent).
“The blockbuster earnings for banks,” Antique Stock Broking said, “would be on account of lower provisioning compared with aggressive provisioning done in the base quarter because of the lockdown.”
“NPL recognition after four quarters and high recoveries from a few corporate resolutions and its impact on revenue and provisions would make March quarter a noisy one for most banks,” Kotak Securities said. It expects 313 per cent YoY profit growth for ICICI Bank at Rs 5,050 crore and 113 per cent rise in SBI’s net profit at Rs 7,633 crore.
Auto maker M&M (up 214 per cent YoY), cement maker Grasim Industries (253 per cent), paints maker Asian Paints (101.70 per cent), drug makers Cipla (159.10 per cent) and Sun Pharma (116 per cent) and ports operator Adani Ports (244.90 per cent) and refiner ONGC (up 207 per cent are also seen reporting strong earnings, says Motilal Oswal.
Auto firms should benefit from strong rural demand, lower interest rates and the preference for personal mobility. Cement makers’ strong numbers would be supported by higher volume growth because of the busy construction season, a low base and price hikes.
In the pharma space, Cipla is seen gaining from higher prescription share in Albuterol inhaler, said Nirmal Bang. It expects companies with a large chronic presence like Sun Pharma to be able to grow faster than industry average, Nirmal Bang noted.
For ONGC, Prabhudas Lilladher expects healthy earnings growth due to higher crude oil prices, even as volume growth is likely to be muted.
“A low base and strong earnings momentum are likely to propel earnings growth to a record 100 per cent-plus YoY for our Nifty pack. Besides, revenue growth is likely to be in high teens — a multi-quarter high. In the light of our Q4 estimates, we expect a Nifty earnings upgrade of 2 per cent for FY21. The earnings upgrades are likely to be led by metals and export-oriented auto firm. Meanwhile, there could be downgrades in domestic auto,” Edelweiss Securities said.
Analysts said commentaries on the impact of the second wave on businesses, margin and pricing outlook, market share gains from unorganised and the banking sector’s credit costs guidance will be noteworthy.