Tag: Earnings preview

BNP Paribas expects IT discretionary demand to pick up in second half this year

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The discretionary demand in the information technology (IT) services industry is likely to pick up in the second half of the current financial year (April-March 2024-25), according to Kumar Rakesh, VP of Equity Research at BNP Paribas.

“There are no material incremental ramp down in the projects and as we move into the second half of fiscal 2025 we should start seeing some of those projects ramping up, some of the new discretionary projects also coming in and that could potentially accelerate the growth and should set us well for FY26 to be an even stronger growth year,” Rakesh said in a conversation with CNBC-TV18.

Also Read | Infosys, TCS are this analysts’ top picks based on three factors

As per BNP Paribas estimates, IT services companies will post constant currency organic revenue growth ranging from -1% to +1% in the January-March 2024 quarter.

Mid and small-cap companies are expected to report a 1-3% quarter-over-quarter (QoQ) organic revenue growth in dollars. \

The recovery of furloughs and the increase in revenue from recently acquired large deals are anticipated to contribute to revenue growth.

Moreover, most companies are expected to witness a sequential improvement in the earnings before interest and tax (EBIT) margin due to operational efficiencies.

“Cyclically we would start seeing many of these companies to start reporting better year-over-year (YoY) growth in the March quarter itself,” he said.

He recommends focusing on large-cap firms with robust client relationships, a strong track record of execution, and the capability to invest in Generative AI technology.

“These companies are trying to equip themselves with the capabilities and understanding of these AI products which they can implement better for the customers. In that context, historically, we have seen Infosys, which has done well. Tata Consultancy Services (TCS) as well,” he said.

Also read | Infosys gets an upgrade after stock lags Nifty 50 by 40% over two years

He believes in the large-cap space, Infosys and LTIMindtree should perform better once the discretionary demand starts picking up.

He also likes Persistent Systems.

BNP Paribas estimates for top IT companies:

-BNP expects Infosys to guide for constant currency revenue growth in the range of 3-5% YoY for FY25.

-For Wipro, it estimates quarterly constant currency revenue growth guidance of -1% to 1% for April-June 2024.

-For HCLTech, it anticipates constant currency revenue growth guidance of 6-8% YoY for FY25. BNP also expects HCLTech to raise its EBIT margin range to 19-20%.

The most important thing to track in the January-March 2024 results of the information technology (IT) sector will be the annual guidance from Infosys and HCLTech.

Accenture’s guidance last month further soured the sentiment towards the demand recovery.

So, the Street expects conservative guidance from both Infosys and HCLTech.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Apollo Hospitals Q2 earnings preview: CNBC-TV18 poll expects revenue growth of 12%, margin may decline

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Apollo Hospitals is set to release its earnings report for the quarter ended September 2023 (Q2FY24) on Thursday, November 9, 2023.

According to a CNBC-TV18 poll, the second quarter revenue growth is expected to reach 12% at ₹4,770 crore, compared to the ₹ 4,251.07 crore reported in the same quarter last year.

However, it is anticipated that the margin will decrease to 12.6% from 13.3% in Q2FY23.

Profit after tax is projected to experience a surge of 38%, reaching ₹293 crore, in contrast to the ₹213 crore recorded in the same quarter the previous year.

The second quarter is expected to be relatively soft due to factors such as slightly delayed rains, resulting in an estimated 7-9% growth in hospital segment revenue. Nevertheless, market participants anticipate an increase in bed occupancy on a quarter-on-quarter basis.

Apollo HealthCo, comprising Apollo 24/7 and the backend pharmacy business, is anticipated to report a year-on-year growth of 15-20%.

Meanwhile, Apollo Health & Lifestyle, the company’s clinic business, is likely to see growth in the range of 3-4%.

Management commentary on fundraising plans and future margins will play a crucial role in influencing the stock’s performance.

On Wednesday, the stock closed at ₹5,116.05 per share, marking a 0.40% decline from the previous day’s closing price. Over the past six months, the stock has registered a gain of 11.39%.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

SBI Q2 results preview: Net interest income growth expected to be slowest in seven quarters

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The State Bank of India (SBI) is set to release its Q2 earnings on Saturday, November 4. According to a CNBC-TV18 poll, the year-on-year net interest income (NII) growth may be the slowest in the past seven quarters, with an expected NII growth of approximately 11% year-on-year (YoY) and around 0.3% sequentially.

Profit growth is projected at 5.8% year-on-year with a quarter-on-quarter decline of nearly 70%. Loan growth is anticipated to slow down to approximately 12% year-on-year and 3% quarter-on-quarter, down from the previous quarter’s level of about 15-15.50%.

ICICI Securities, on the other hand, is estimating slippages at ₹5,500 crore, which can be compared to the ₹7,900 crore figure in the previous quarter.

Kotak Securities is expecting operating profit growth to be a mere 0.9% year-on-year, with a substantial 15.8% quarter-on-quarter decrease. It’s important to note that in the previous quarter, a significant treasury income of about ₹3,800-3,850 crore bolstered the operating profit, so its absence may lead to a decline.

Asset quality is expected to remain stable or even improve, with Motilal Oswal anticipating a 15 to 20 basis point sequential reduction in the gross NPA ratio.

The management’s comments regarding growth outlook will be of particular interest.

Shares of SBI, on Friday, November 3, settled at ₹579.15 apiece on the BSE. The stock has remained flat over the past month.

Also Read | Centrum Broking’s CEO highlights top stock choices in banking and auto

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Strong demand, declining costs to boost cement sector: Axis Capital

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Amit Murarka, Executive Director at Axis Capital is optimistic about the cement industry. He believes the sector stands strong due to several positive factors: high demand, lowered costs, and price hikes. These combined conditions make the industry’s situation just right, reminiscent of a Goldilocks scenario.

“We are very well positioned for the overall sector as a whole. Things have aligned very well for the space. We are in a Goldilocks scenario in that sense, strong demand, a decline in cost as well as price hikes,” he told CNBC-TV18.

He expects the upcoming six to twelve months to be favorable for the industry.

UltraTech Cement is his preferred pick from the sector.

From the small and midcap space, he likes JK Cement.

Analysts pointed out that traditionally the second quarter has been a seasonally challenging period for cement companies, with limited price hikes. However, this time, the scenario is different, with cement prices remaining relatively stable, experiencing only slight declines on a sequential basis.

Murarka noted that the fourth quarter generally is the best quarter for the cement sector. Strong demand plus price hikes generally happen in quarter four.

Analysts estimate a 10-12% year-on-year increase in cement demand due to increased infrastructure investments leading up to the elections.

Murarka pointed out that election or pre-election years are a great period for the cement sector as infra spends are high, and private demand gets supported by industry hikes.

“We have seen that coming through this year as well. The state election calendar has been announced for November and general elections should be four to five months after that. Next year is something that we will have to see. We would not expect a double-digit demand growth next year per se,” he explained.

Also Read | How Indian elections may affect the share market — Goldman Sachs bets on these top seven stocks

However, he expects the demand momentum to stay strong.

“Private demand including the urban real estate is looking good from a longer-term perspective,” he stated.

For more details, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Nomura: Indian IT primed for AI, global investors show cautious optimism

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Nomura Tuesday released a report on the Indian Information Technology (IT) industry based on its meeting with over 50 institutional investors in the EU and the United States over the last two weeks.

The report comes just a day before IT major Tata Consultancy Services (TCS) kicks off the second quarter FY24 earnings, on October 11. HCL Tech and Infosys will follow a day later.

Nomura’s key takeaway from the meetings is that investors are largely cautious about the Indian technology sector, but they are less underweight now compared to a year ago.

The report also highlighted that Indian IT companies’ preparedness to ride the generative AI wave is very high. “Indian IT companies are much better prepared today to ride the generative AI wave compared to what they were prior to the last wave, which was the cloud wave,” the report noted.

Among large caps Nomura has seen investor interest in Infosys, TCS, Tech Mahindra, HCLTech, and Cognizant. However, Wipro doesn’t figure on the list.

In the mid-cap space, Coforge and Persistent Systems are two preferred picks of foreign investors.

Nomura answered three key questions surrounding the IT industry’s performance.

On investor concerns about the current demand cycle and how the Indian IT industry is placed, Nomura said the discretionary demand continues to be hit, particularly in the BFSI space.

However, Nomura believes the companies will continue to lower overall costs given the high inflation in the US and the labour shortages.

Also Read | Q2 Earnings Preview: Here’s all you need to know about expectations from various sectors

Nomura believes growth will meaningfully bounce back. They estimate 8.2% for next year for large cap, which compares with just 3.2% in the current year. So growth will bounce back but on a low base.

Margin performance 

The expectation is margins may expand, but not to the extent that the Street was anticipating a year ago. Nomura expects margin expansion of about 50 basis points excluding Tech Mahindra.

In the case of Tech Mahindra, it could be a lot higher because of the low base and initiatives taken by the company’s new CEO.

Adoption of new businesses like generative AI 

While companies are rigorously preparing for the new wave, Nomura expects generative AI’s adoption to increase significantly only gradually over 18 to 24 months.

For more details, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Nuvama Institutional lists insurance segments to watch out for in Q2

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The life insurance sector appears poised for impressive growth, with a strong focus on specific segments, according to Madhukar Ladha, Director, Nuvama Institutional Equities.

In terms of product mix, for the life insurers, the growth is driven more by Unit Linked Insurance Plans (ULIP) as that market is doing well, he said in an interview with CNBC-TV18.

“What will be important to see will be how individual protection is growing and whether non-par products are holding up in the share given that interest rates have moved higher for other products,” he said.

The aggregate value of new business (VNB) is forecasted to grow by 13.5% year-on-year (YoY). Simply put, VNB is the estimated worth of profits from newly sold policies.

He also expects the VNB margin to rise 136 basis points (bps) year-on-year rise to reach 28.3%.

Also Read | Q2 Earnings Preview: Here’s all you need to know about expectations from various sectors

According to him, the Street does expect slightly muted margins on a YoY basis.

On the stock of HDFC Life, which has been subdued for a while now, he said, “It is still a rock solid company. They are the product innovation leaders in the market. The brand inspires a lot of confidence and faith from buyers of their products. So still the company is pretty good. Having said that, what will be a key monitorable is after it has become a subsidiary of HDFC Bank, how much more support can it get from the bank.”

HDFC Bank’s sales distribution among Tata, Birla, and HDFC Life currently leans towards HDFC Life, accounting for approximately 55-57%. Analysts anticipate a significant increase in this proportion. If this projection materializes, it could result in a stock reevaluation, as he elaborated.

However, his top pick from the sector would be SBI Life.

“My top pick would be SBI Life. On a valuation basis as well as the growth that they are showing and margins that they have, I like SBI Life the most right now,” he said.

For more details, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Strong domestic investor appetite likely to buffer market from steep dips, says Ashwini Agarwal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ashwini Agarwal, Founder and Partner at Demeter Advisors believes that all the elements needed for a sharp market correction are in place at the moment. However, as long as there is no imminent risk to the domestic investor appetite, the possibility of a sharp sell-off is highly unlikely.

“There are all the elements in place for a sharper correction but whether it will happen totally depends on domestic investor sentiment. There are currently robust fund inflows, whether through mutual funds or directly,” he told CNBC-TV18.

In the financials space, he holds the view that there is currently no immediate cause for concern with respect to banks’ earnings. However, the rising proportion of unsecured loans could be a worry at some point if the economy slows down.

He said he preferred indirectly investing in the real estate sector through proxy players, such as plywood, tiles, fittings, or even construction materials like wood and cement.

“Directly buying real estate companies is always fraught with some amount of project-related risks, which I like to personally steer away from,” he said.

For more details, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India a long-term growth story, expect 12-18% earnings expansion annually, says Kotak Mahindra AMC

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Now that the Reserve Bank of India (RBI) policy has been addressed, attention is shifting back to corporate earnings as companies prepare to release their financial results for the September quarter, beginning this Monday. Tata Consultancy Services (TCS) will kick off the earnings season for the Nifty 50 stocks on Wednesday.

Nilesh Shah, MD, Kotak Mahindra AMC said, “Earnings are also growing at 1-1.25% a month. So there could be a combination of both, time and price correction, than just price correction.”

“India is a longer-term growth story and our earnings at least for the foreseeable future are expected to grow anywhere between 1% a month to 1.5% a month. That is a growth rate of anywhere between 12% and 18% depending on what kind of portfolio you have picked up,” he added.

According to him, as long as this earnings growth trajectory continues to remain, every correction is an opportunity to buy.

Many of the smaller companies are trading at a higher valuation than larger companies which is unlikely to sustain for long, he said.

The RBI Monetary Policy Committee (MPC) has kept its growth projection for India’s GDP at 6.5% for the 2023-24 fiscal, Governor Shaktikanta Das announced on October 6.

While sharing his views, he said, “RBI has done a fantastic job with managing conflicting objectives from growth, inflation, rupee, government’s borrowing programme in financial sector stability in control and no wonder RBI governor got the recognition as the best central banker of the world.”

Also Read | Will strong deal wins result in better guidance for TCS, Infosys and peers?: IT Earnings Preview

According to him, in terms of results, there will be case-specific stories but overall general disappointment.

“Market has discounted that the September quarterly results will not be as attractive,” he said.

Meanwhile, Pankaj Chhaochharia of Antique picked industrial, real estate, cement, and PSU Banks as preferred investment choices.

Chhaochharia said global bond yields and crude oil prices pose potential short-term risks. He anticipates positive earnings surprises from companies such as SBI, ITC, Lupin, NCC, and others, while they foresee negative surprises from stocks like Tech Mahindra, Asian Paints, Dr. Reddy’s, and Indian Hotels.

Varun Lohchab from HDFC Securities, however, expects the upcoming earnings season to be reasonable. The key issue this time lies in the timing of festive demand, as a significant portion is likely to occur in Q3 due to Diwali falling slightly later compared to the base year when some of it was in Q2, he noted.

As a result, certain sectors like consumer durables or auto companies may not appear as strong in terms of their numbers when viewed optically. However, if one considers the expectations for the festive season as a whole, they appear to be reasonably positive.

For more details, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Sun Pharma Q1 earnings expectations | Speciality drugs like Ilumya, Winlevi, Cequa to lead growth

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Sun Pharmaceutical Industries, one of India’s leading pharmaceutical companies, is set to release its financial results for the first quarter of the fiscal year 2024.

As investors eagerly await the numbers, all eyes are focused on the performance of its specialty business, which is anticipated to be a key driver of growth.

Analysts predict that Sun Pharma‘s revenue will witness an approximate 8 percent increase, showcasing the company’s continued progress in expanding its market presence.

Moreover, it is expected that the margins for the specialty business will likely hover around 24-25 percent, reflecting the company’s ability to maintain a competitive edge in its specialized products.

In terms of profitability, the company is projected to achieve a profit of around Rs 2,090 crore. Interestingly, this figure is likely to remain flat when compared to the same period last year. However, it is worth noting that the flat performance shouldn’t overshadow the overall positive outlook for the company.

The speciality portfolio is expected to play a significant role in driving the company’s growth. The portfolio comprises essential drugs like Ilumya, an innovative psoriasis drug, WINLEVI, which targets acne, and CEQUA, an eye drug. In the last quarter, the global sales of the speciality portfolio surged remarkably by 28 percent year on year, amounting to $244 million.

Market expectations indicate that Sun Pharma is likely to achieve a single-digit growth rate during this quarter. The anticipated growth range stands between 6 percent and 9 percent, with positive contributions expected from both the speciality portfolio in the US and other international markets.

Sun Pharma is also expected to benefit from the sales of its generic version of Revlimid in the US market. Revlimid is a crucial cancer drug, and the estimated revenue for this drug in the US market is predicted to be between $440 million and $465 million. This would represent a notable improvement compared to the previous quarter’s revenue of $430 million.

For its domestic formulations business, Sun Pharma is anticipated to achieve growth between 8 percent and 10 percent. The company’s specialty business is likely to support these positive figures.

However, it’s essential to consider that these gains may be offset by higher research and development (R&D) spending and remediation charges associated with issues, such as those at the Halol facility.

As the earnings report is released, investors will closely scrutinize several factors impacting Sun Pharma’s performance. Among these factors are the Halol import alert and the Mohali consent decree issued by the US FDA. Additionally, investors will eagerly seek updates on the specialty portfolio’s sales progression toward the significant milestone of $1 billion.

Furthermore, Sun Pharma’s management commentary regarding the US pricing pressures and the NDA filing of a recently acquired alopecia drug by Concert Pharma will be keenly observed by industry analysts and investors alike.

For more details, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Kotak Mahindra Bank preview | Loan growth expected to be strong

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Kotak Mahindra Bank, one of the leading private sector banks in India, is anticipated to release its financial performance for the first quarter of FY24 on July 22, 2023. Analysts and investors are keeping a close eye on the numbers, hoping to gain insights into the bank’s growth trajectory and asset quality in the current economic landscape.

One key area of interest is the net interest margins (NIMs), a critical indicator of a bank’s profitability. It is expected that the NIMs might see a slight moderation on a sequential basis, but it should be noted that the previous quarter witnessed a robust margin of 5.75 percent. This could provide some reassurance to stakeholders, as the bank maintains a strong footing despite potential fluctuations in the NIMs.

The performance of Kotak Mahindra Bank‘s loan portfolio is another crucial aspect. According to Motilal Oswal Securities, the bank is expected to witness healthy loan growth, with an estimated 18.2 percent year-on-year (YoY) increase and a 3.5 percent quarter-on-quarter (QoQ) growth. Similarly, deposit growth is projected to remain healthy, with Motilal Oswal estimating an 18.7 percent YoY increase and a 3.4 percent sequential growth.

However, analysts are cautious of a possible decline in NIMs, with estimates ranging between 15 to 25 basis points (bps) on a sequential basis. This potential moderation highlights the importance of monitoring the movement in low-cost deposits or current account/savings account (CASA) deposits. The CASA ratio for the industry as a whole has been on a declining trend, making it a critical aspect to watch for in Kotak Mahindra Bank’s results.

On the bright side, asset quality is expected to show improvement on a sequential basis. Motilal Oswal forecasts a decline of 10 basis points in the gross non-performing asset (NPA) ratio to approximately 1.7 percent. This improvement, if realized, could boost confidence in the bank’s risk management and loan portfolio quality.

Apart from the financial numbers, market participants will also be keenly observing the management commentary and outlook. These insights can provide valuable guidance on the bank’s long-term growth prospects and the trajectory of profitability.

According to a CNBC-TV18 poll, Kotak Mahindra Bank is expected to report a net interest income (NII) growth of 32 percent YoY and about 1.7 percent sequentially. Furthermore, analysts are working with a profit growth estimate of 57.9 percent YoY, with a potential decline of about 6-6.5 percent sequentially.

For more details, watch the accompanying video

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow