Q1 Earnings: Wondering what’s in store this earnings season? View Sector Wise Preview of Brokers

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Several brokerages have come out with reports that give insight into how different sectors performed in the June quarter and what investors should expect during the earnings season. While some sectors are yet to be previewed by the analysts, the areas that have been previewed are discussed below:

IT Sector

Kotak Institutional Equities expects companies to outperform on a sequential basis in the June quarter owing to seasonal factors, while the year-on-year growth is likely to be strong.

Margins remained under pressure as companies deal with high staff layoffs resulting in higher retention costs and increased travel and discretionary expenses. And TCS may do well, but many others are at risk of declining growth, Kotak said. IT Stock Has corrected and is already creating a slump in spending, however, the bearish environment has not been fully captured in stock prices. Risk: Reward in Infosys, is more favorable and stocks are top sectors of the quota.


pharma


Nirmal Bang Institutional Equities said sales of the domestic branded formulation in 1QFY22 benefited from the favorable impact of the fresh spurt in Covid cases. Owing to the higher base, this brokerage expects most of the pharma names to underperform in the domestic market on a year-on-year basis in 1QFY23.

However, those with a much older presence, such as JB Chemicals,

And relatively should be much better, Nirmal Bang said. Selected companies in the US market should see growth. Will grow rapidly in the US, led by gRevlimid. Sun Pharma’s US sales could grow in the low single digits before it progresses in a meaningful way in the second quarter. And, which had a relatively higher exposure to COVID drugs, sales could see a flat to negative growth trend. Raw material inflation and higher freight costs may continue to impact performance.

multiparticipant

For Q1FY23,

Said that the multiplex industry is likely to register a gradual recovery. Customer count will improve in the quarter, and after nearly eight quarters of disruption for multiplexes, there was less disruption on the whole. ATP has already crossed pre-COVID levels, and considering a healthy movie line-up, we expect FY13 to be a strong year for the multiplex industry.

Meanwhile, broadcasters will have a tough time. There will be huge pressure on the margins of ZEE. Inflation has cut advertising spending. Furthermore, extending the implementation of NTO 2.0 to November means that no hike is possible on the membership side. Brokerages prefer multiplexes over broadcasters, and our top picks are PVR and

,


Construction


Nirmal Bang expects 1QFY23 to be a moderate quarter for construction companies as performance is expected to remain muted while higher input costs (cement, steel, bitumen and sand/aggregates) are likely to weigh on margins. While there has been some respite in cost inflation, due to reduction in steel prices, it believes its impact on margins will be visible only till Q2FY23.

“Within our coverage universe, we expect

(ASBL) to report better revenue growth as compared to peers while KNR is likely to report better margins. The brokerage said, “Given the sharp jump in order inflows and good order book in March 2022, we expect FY23 to be better in terms of execution and expect execution growth from 2HFY23 onwards,” the brokerage said.

consumer durables

Prabhudas Lilladher said that there was some moderation in demand at the end of the quarter due to improvement in commodity prices (10-15 per cent in June) and offset by the summer season. Overall, companies were reluctant to hike prices. Although commodity costs have begun to correct, PL’s channel checks indicate that further price hikes will be inevitable, it said.

Rural demand remains weak and PL said its consumer durables sales are expected to grow 70 per cent year-on-year. With continued raw material inflation, inability to increase prices due to weak demand and withdrawal of some discretionary costs, we expect margins to remain under pressure (+10bps QoQ) for our coverage universe.

It expects EBITDA/PAT of 98/103 percent year-on-year growth in its coverage universe. Although we remain structurally positive on the long-term prospects, we see demand adverse conditions due to higher inflation in the near term

chemicals

For chemical companies, Q1FY23 will be the first full quarter of crude oil prices with continued supply chain challenges, said

,

BropKerage said it would have been a challenge for most chemical companies to manage volumes and margins simultaneously. Only a handful of players in the purview of JM such as SRF,

, Clean Science, and could report both QoQ and YoY Ebitda growth. SRF, JM Financial said, will continue to benefit from higher ref gas prices, while Naveen will benefit from sequential contributions from HPP and specialty chemicals contracts. PI’s domestic business will perform well due to seasonal offsetting weakness in the CSM business. Clean Science will benefit from the rise in prices amid gradual fall in phenol prices.

cement

Said that the cement industry is likely to witness a growth of 16-17 per cent year-on-year during the first quarter of FY23, implying a volume CAGR of 4.5 per cent on a 3-year basis. South and West regions are likely to witness strong YoY growth on a lower basis affected by the second COVID wave, while rest of the regions are likely to witness high single digit growth in Q1FY23. It does not see much exposure to consensus estimates of industry volume growth of 8-9 per cent annually for FY13.

The brokerage said the industry average EBITDA per tonne QoQ in Q1FY23 is likely to decline by over Rs 50 per tonne to Rs 950 per tonne, seeing a 6-7 per cent QoQ price increase that will largely offset the similar QoQ cost increase. However, industry profitability may decline further in the rapid QoQ in the absence of any price increase in Q2FY23, as overall cost/te will still increase in QoQ, while Q1FY23 exit prices are 3 percent lower than average Q1FY23 prices. . ICICI Securities said consensus FY23-24E earnings may be at risk, but they are substantially priced.

(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of The Economic Times)

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