Narnolia Financial Advisors
Major companies that have declared their result so far have reported topline growth of 16.2 percent and net profit growth of 19.1 percent. Financials have reported a 21 percent year-on-year growth in net interest income (NII) and 24 percent growth in net profit. Among Nifty constituents, 11 companies that have announced their results, with reported revenue and PAT growth at 16 percent and 22 percent, respectively.
Net profit growth of these Nifty companies have come ahead of estimates. Does this suggest the end of persistent earning downgrade cycle that we have witnessed over last three financial years? For each of the last three financial years, reported earnings per share (EPS) was way lower than what the estimate was at the beginning of the fiscal. Results primarily of corporate lenders like State Bank of India, Bank of Baroda, Axis Bank and ICICI Bank would be key. The result and management commentary of Federal Bank gives us some hope in this regard.
While Bajaj Finance, Wipro and Tata Consultancy Services reported numbers were much ahead of expectations, Bajaj Auto, Mindtree and Hindustan Unilever were below expectations. Margin contraction amid rising sales for Bajaj Auto had been a major negative surprise.
This week, among Nifty constituents, Hero MotoCorp, Maruti Suzuki, Larsen & Toubro, Dr Reddy’s Laboratories, ITC, Yes Bank, ICICI Bank and NTPC will be declaring their results.
Key results expectations next week:
Key trackables to be watched out in the above companies’ quarterly results are:
Hero MotoCorp- EBITDA Margin sustenance and LEAP program benefit which is expected to provide 50-60bps benefit for FY19. Management expects close to double digit growth for industry in FY19 with long term sustainable EBITDA margins guidance of 14-15%.
Maruti- Gujarat plant production status: delay in ramp-up may lead to higher waiting periods
Larsen and Toubro- Execution status of various projects.
DR Reddy’s Labs- Resolution status of USFDA warning letters for Srikakulam, Duvvada and Miryalaguda plants
ITC- sustenance of gradual improvement in cigarette volume and EBDITA margin expansion in other FMCG business.
NTPC- EBDITA Margins and PLF for coal-based Projects
Yes Bank- Slippage, Growth in retail assets and NIM as it has come under immense pressure due to rising cost.
ICICI Bank- NCLT resolution and recovery & up-gradation, Slippages trend within watch-list.
Disclaimer: The author is Head of Research, Narnolia Financial Advisors. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.[“Source-moneycontrol”]