Except fast moving consumer goods (FMCG), pharma, information technology (IT) and to some extent telecom, G Chokkalingam, founder and chief investment officer at Equinomics Research expects PAT to dip 8 – 10 per cent YoY at an aggregate level for the remaining sectors. “Airlines, hotels and cinemas will continue to bleed in Q2FY21 as well, as their operations remained hampered. Sequentially, there can be around 5 – 10 per cent uptick in PAT at an aggregate level given the low base of Q1FY21,” Chokkalingam said.
“On a YoY basis, we have to keep expectations subdued on an overall basis. This is because of the fact that in Q2, India’s GDP is expected to fall anywhere between 8 to 11 per cent on a YoY basis post 23.9 per cent fall in Q1. Though revenues could fall YoY due to lower volumes and soft commodity prices, margins could see an uptick due to lower raw material costs, aggressive cost control measures and lower tax rate,” cautions Deepak Jasani, head of retail research at HDFC Securities.
Mid-and small-cap companies, Jasani says, could continue to face challenges at a time when the activity levels have not reached normal and fund availability remains constrained. “However, select companies
in sectors like chemicals, Pharma, IT services, Cement, Metals, could still perform well due to demand conditions being favourable and commodity prices being benign,” he feels.
At YES Securities, their lead analyst, Hitesh Jain, has pegged the YoY profit growth for Nifty 50 (ex-financials) at 9.1 per cent and at 78.8 per cent QoQ. At the PAT level, he forecasts a growth of 4.6 per cent YoY and 164 per cent QoQ.
As regards the financial sector, analysts at Credit Suisse expect the management commentary on asset quality to turn more positive given a recent pick-up in collections. Also, as moratorium was in place till August-end, non-performing loan (NPL) slippages are likely to be low and provisioning will be primarily to raise provision buffers.
“We expect most banks to raise provision coverage ratio (PCR) on existing NPLs to over 70 per cent and add 0.2 – 0.5 per cent fresh provisions to Covid-19 buffer. We expect sharpest reduction in quarter-on-quarter (QoQ) provisions at ICICI Bank. HDFC Bank is likely to report strongest, around 18 per cent earnings growth. Smaller banks are expected to report improved deposit growth,” says Ashish Gupta, an analyst tracking the sector at Credit Suisse.
during the period under review have seen a healthy rise with the S&P Sensex and the Nifty 50 rallying 9 per cent. Mid-and small-cap indices, on the other hand, have outperformed during this period with a rise of 12.6 per cent and 20 per cent, respectively.