Two big events that are on the watchlist of every investor in the early part of this year are the earnings summary for the quarter ended December, and the upcoming Budget 2022.  

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The December quarter did witness elevated volatility and some pull-back with the influx of a new COVID variant (Omicron) as well as selling of USD4.8b in 3QFY22 by foreign investors.

But, the Q3 quarter is likely to see a double-digit growth from India Inc, despite some headwinds, according to experts from top brokerage firms. Sectors that could take the lead include metals, BFSI, Oil & Gas as well as Information Technology.

“After two strong quarters of earnings growth, we expect MOFSL Universe to register another healthy quarter of 22% YoY growth in 3QFY22 on a high base of 33% YoY growth in 3QFY21,” Motilal Oswal said in a note.

“While the aggregate growth is impressive, it is narrow and driven by just four sectors – Metals, BFSI, O&G and IT. Two-thirds of the incremental growth is steered by Metals and Oil & Gas (O&G) sectors, with the Financials sector driving the remainder,” it said.

On the other hand, the automobile and construction sector could remain under pressure, suggest experts.

“We expect a decline in the net income of (1) automobiles (production issues, RM headwinds) and (2) construction materials (weak demand environment, higher fuel, and power costs) sectors,” Kotak Institutional Equities said in a note.

We have collated a list of companies based on the expectations from different brokerage firms that are likely to report over 100% year-on-year (YoY) gain in net profit for the quarter ended December:

Brokerage Firm: Motilal Oswal

Ashok Leyland: Net Profit seen at 226%

Ashok Leyland is likely to report an over 200 per cent year-on-year (YoY) rise in net profit for the quarter ended December. High-cost inflation and higher MHCV contribution to margins might keep margins under pressure.

LCV growth is likely to be driven by new launches, and further growth is likely with an increase in geographical reach.

Bharat Forge: Net Profit seen at 148% YoY

Motilal Oswal expects Bharat Forge to report a 148 per cent YoY growth in net profit for the quarter ended December.

Semi-conductor shortage related impact expected in 3QFY22 for exports of CVs and PVs, said the note. On the other hand, domestic CV and PV businesses are likely to see good QoQ improvement.

JSW Steel: Net Profit seen at 115% YoY

Motilal Oswal expects JSW Steel to report a 115 per cent YoY growth in net profit for the quarter ended December.

The brokerage firm expects the standalone sales to increase 19% QoQ on BPSL merger. The standalone EBITDA/t to decline 13.9% to Rs 19.698/t, driven by strong input cost-push, especially in coking coal.

Tata Steel: Net Profit seen at 169% YoY

Motilal Oswal expects Tata Steel to report a 169 per cent YoY growth in net profit for the quarter ended December.

The brokerage firms expect the standalone EBITDA/t to decline 19% QoQ to INR25,524/t on increase in RM costs, decline in export NSR.

Standalone EBITDA includes Tata Steel BSL numbers post the merger in 2QFY22. It expects TSE to continue to report strong EBITDA at USD179/t. Motilal Oswal expects consolidated EBITDA at INR180b QoQ (up 9.3%), driven by strength in Europe operations.
 

Trident: Net Profit seen at 116% YoY

Motilal Oswal expects Trident to report a 116 per cent YoY growth in net profit for the quarter ended December.

The brokerage firm expects Textile/Paper segment revenue to grow by 35% YoY each. The outlook on paper prices is a key monitorable.

AU Small Finance Bank: 363% YoY

Motilal Oswal expects AU Small Finance Bank to report over 300 per cent YoY growth in net profit for the quarter ended December.

The brokerage firm expects margins to increase to ~6%. Business growth to see healthy pickup on a QoQ basis and the asset quality and movement in SMA book (Special Mention Account) to be key monitorable.

Axis Bank: Net Profit seen at 164% YoY

Motilal Oswal expects Axis Bank to report over 160 per cent YoY growth in net profit for the quarter ended December.

Credit costs to remain elevated, but slippages remains to be a key monitorable to assess the impact on asset quality.

The brokerage firms see margins to remain stable at ~3.4%. Business growth to pick up QoQ, said the note.

Brokerage Firm: YES SECURITIES

Dr Reddy’s Laboratories: Net Profit seen at 2602% YoY

YES SECURITIES expects Dr Reddy’s Laboratories to report over 2000 per cent YoY growth in net profit for the quarter ended December.

Dr Reddy’s Laboratories had few approvals like gNuvaring whose full benefit would be seen in Q4 though gVascepa would continue to drive growth given the comfortable API situation.

Early days for Trastuzumab biosimilar (marketing arrangement only) in Lat Am and SE Asia and gNuvaring approval in US.

“Vacepa to drive 5% QoQ US growth while domestic sales to come off sequentially due to higher Covid contibution in Q2. Gross margin weakness to flow in to EBIDTA,” said the note.

Prestige Estate: Net Profit seen at 127% YoY

 

YES SECURITIES expects Prestige Estate to report over 120 per cent YoY growth in net profit for the quarter ended December.

 

Prestige Estate cater to the affordable segment of the market. The key monitorable from the Q3FY22 results will be the project addition/acquisition for all the companies in coverage and launch status of projects from robust pipeline.

 

Investors should watch out for update on the Mumbai annuity projects status along with the response to Jasdan classic. Also, need to see the response to the recently launched phases in The Prestige City, Sarjapur, said the note.

 

Sunteck Realty: Net Profit seen at 483%

 

YES SECURITIES expects Sunteck Realty to report over 400 per cent YoY growth in net profit for the quarter ended December.

 

Sunteck is expected to launch another phase in Naigaon and recently acquired Vasai project in Q4FY22 along with the incremental floors open for sales in Avenue 1 & 2.

 

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)