With macro factors in India improving further in the quarter ended December, domestic-oriented sectors are seen leading the earnings for yet another quarter.
Led by strong topline and improved profitability, atleast 23 companies are likely to see their profits more than doubling year-on-year (YoY) in the December quarter, according to the estimates given by Motilal Oswal Financial Services.
Most of these companies are part of automobile, auto ancillary, capital goods, electronic manufacturing, metals, and a few in the financial services sector.
Within the Nifty 50 universe, automobile, BFSI and oil marketing companies are seen propelling the overall profit by 10% YoY in the reporting quarter, according to Motilal Oswal. About 17 Nifty companies are likely to report a PAT growth of more than 30% YoY, whereas 10 companies are expected to report a decline in the bottomline.
HDFC Bank, Tata Steel, Reliance Industries, ICICI Bank and JSW Steel are likely to seen driving overall earnings of Nifty 50, while Wipro, SBI, Coal India, Tech Mahindra and UPL are projected to see a fall.
Automobiles
Automobile companies are likely to report a strong 35% YoY growth in earnings, led by healthy volumes and expansion in margins due to cost efficiencies and operating leverage.
Tyre makers – Balkrishna Industries, CEAT, and MRF – may see profits rising 228-398% YoY.
Among automakers, Maruti Suzuki India is seen reporting a 31% YoY growth in profit, led by a 15% increase in sales and 45% rise in operating profit, showed Motilal Oswal’s estimates.
Among auto ancillaries, Samvardhana Motherson is likely to see its net profit soar 89% YoY, on the back of a 25% growth in the topline and 46% growth in operating profit.
Capital Goods
Healthy execution and strong order inflows are seen driving the performance of capital goods and engineering companies.
Within this space, Hitachi Energy and KEC International will see multifold rise in profits. Hitachi Energy’s profit is likely to surge 895% YoY, that of KEC International may jump higher by 549%, estimates showed.
Sector major Larsen & Toubro may report a 41% growth in profit, led by a 16% growth in revenue and 22% growth in EBITDA.
Electronic Manufacturing
Companies such as Avalon Technologies, Cyient DLM, and Kaynes Technology, which provided integrated engineering solutions for manufacturing, are seen reporting robust earnings for the December quarter.
Both Avalon Tech and Cyient DLM are expected to see profits rising more than 150% YoY in the quarter gone by. This will be led by a healthy growth in the topline and operating profits, Motilal Oswal said.
Metals
In the metal pack, Hindalco Industries is likely to see profits more than double on year in the December quarter, primarily due to easing cost pressures and better realisations. Operating profit of the aluminium major is expected to rise by a sharp 74%.
In the steel pack, JSW Steel is expected to report a whopping 329% growth in net profit despite a muted topline, due to sharp improvement in profitability.
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