NEW DELHI: Select auto makers, oil marketing firms, power utilities and FMCG companies could be among the worst performing Nifty50 companies in terms of September quarter bottomline growth.
As many as 15 companies may log a drop in net profit or report losses for the quarter, which is otherwise expected to be a good earnings season with the Nifty firms in aggregate projected to deliver a strong 25-37 per cent profit growth.
Four auto companies — namely Maruti Suzuki, Hero MotoCorp, Mahindra & Mahindra and Eicher Motors — may report 8-45 per cent fall in September quarter profit while Tata Motors may report losses, suggests Motilal Oswal Securities.
FMCG firms Britannia Industries (down 13.9 per cent) and Nestle India (down 3 per cent) are also expected to report negative growth for the quarter. Among the banks, Kotak Mahindra Bank may log 17 per cent drop in profit; pharma firm Dr Reddy’s Labs is seen clocking a 17.4 per cent degrowth in profit; cement maker Shree Cement may also log a single-digit fall in bottomline. Oil marketing companies (OMCs) BPCL and IOC are expected to see profit shrink by 44.3 per cent and 37.4 per cent, respectively.
Power utilities Power Grid may see a marginal fall in YoY profit, but NTPC could report a 22.5 per cent decline in bottomline.
In the auto sector, analysts said semiconductor shortage has hurt supplies for personal vehicles, premium two-wheelers and light commercial vehicles (LCVs), which will potentially impact the forthcoming festive season.
“While demand for personal vehicles and commercial vehicles has been strong, challenges related to global chip shortage intensified in August and September, having a 40-45 per cent impact on volumes. Major OEMs announced production cuts. Considering the current level of demand in PVs (18-20 per cent higher enquiries over last festive) followed by lower level of inventories (less than 2 weeks), we expect significant impact on the festive volumes,” said YES Securities.
In the case of NTPC, profit may fall on a year-on-year basis on account of lower other income, Edelweiss Securities said and suggested that capital expenditure and capitalisation of new assets are key things to watch out for in Power Grid numbers.
For Kotak Mahindra Bank, Axis Securities believes the commentary on restructuring, SME book and the outlook on credit cost will be key.
Among the FMCG players, Edelweiss expects Britannia’s volume to grow 4 per cent on a base of 9 cer cent YoY. It said price hikes are about 3 per cent YoY however value-volume differential will be lower on account of adverse mix.
“On the margin front, raw material trend is inflationary and will lead to 310bps YoY gross margin contraction,” it said.
Unlike Motilal Oswal Securities, this brokerage expects Nestle to report a single-digit rise in profit. “Export revenue is likely to dip 7 per cent YoY. Raw material pressure is high and we expect Ebitda margins to fall 90 bps YoY,” it said.
Shree Cement’s volumes may fall 3 per cent YoY, said Emkay Global, adding that total cost per tonne should increase by 18 per cent YoY, mainly due to higher input cost, resulting in a 16 per cent fall in blended Ebitda per tonne to Rs 1,270. This brokerage sees 10.9 per cent YoY fall in Shree Cement’s profit at Rs 487.60 crore.
For Dr Reddy’s, updates on niche ANDA filings over the next 12–15 months will be keenly watched.