The latest earnings season (3QFY20) shall gather steam in next
few days with some large companies announcing their quarterly numbers. The
market expectations this time are at great variance, insofar as the aggregate
numbers are concerned. The consensus is limited to the point that financial
services, especially banks, and midcaps (especially agri input) shall perform
much better.
- Improved credit growth, NPL recovery, lower tax and slower fresh slippages are the main factors cited for better results by the financial sector.
- Good monsoon, higher MSP and prospects of a strong Rabi crop are some key factors cited for better performance of agriculture input (chemicals and fertilizers) sector. Strong pricing despite lower volumes is expected to help profitability of cement companies.
- The earnings in automobile sector are expected to stay muted, as demand failed to pick up despite a good start to festival season. The estimates however vary dramatically from a sharp contraction in both revenue & profitability to a marginal improvement in revenue with decent EBIDTA and PAT growth.
- Real Estate is another sector, where the consensus is expecting a sharp improvement in both revenue and profitability.
- Consumption is another sector where the estimates are at sharp divergence insofar as the revenue growth is concerned. However, not much variance exists insofar as the contraction in margins is concerned.
- In metals, steel sector is expected to report poor numbers with lower margins. Non-ferrous metal companies may though report a decent quarter.
- Mixed results are anticipated from Pharma sector. The aggregate number may show a poor picture on EBIDTA front, however within sector there could be large divergences with some companies doing exceedingly well on the back of new launches and improved domestic sales.
- Expectations of slowdown in tech spending in key markets of USA and UK appear weighing on the IT sector earnings forecasts.In my view, the results may miss even the modest expectations and lead to further downgrad of earnings. The consumption demand outlook may particularly disappoint markets, even if some early signs of cyclical bottoming appear on the capex side.I find the following estimates of some brokerages worth sharing with the readers.
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