healthy profits butrevenue growth lags

Healthy profits but revenue growth lagsNifty companies are expected to report anotherquarter of double-digit growth. Net profit growth ata bit over 11 per cent year-on-year is expected to beled by Bharti Airtel, Tata Motors, State Bank of Indiaand Tata Consultancy Services. The growth will belower than the June quarter’s 16 per cent. Themoderation, also seen in the Nifty basket revenuegrowth as halving to five-seven per cent year-on-year, is largely because export-oriented sectors arenot expected to benefit as much on account of aweak rupee for the September quarter. Further,higher growth in the domestic space is limited toautomobile, cement and fast-moving consumergoods (FMCG) sectors. Revenue growth is expected tofall to single digit after four quarters of double-digitgrowth that peaked in the June quarter at 15 percent. Operationally, though, the performance isestimated to improve. Given lower raw materialcosts, margins are expected to inch up 70-80 basispoints year-on-year to 24 per cent. Analysts expectyear-on-year earnings per share for Niftycompanies to be ~458 for FY15, up 17 percent, led by banking, auto, FMCG andinformation technology sectors. TheFY15 earnings growth is expected tobe led by lower commodity prices,

economic recovery and lower inflation. Earningsbefore interest, taxes, depreciation and amortisationmargins are expected to improve 200 basis pointsover two quarters. SI TEAM

Net sales % chg Net profit % chg Net sales % chg Net profit % chg Net sales % chg Net profit % chg

AXIS BANK 397 448

BofA-Merrill Lynch 3,313 12.8 1,598 17.3

Edelweiss 5,272 12.1 1,711 25.6

Kotak 3,274 11.5 1,705 25.1

BANK OF BARODA 872 1,013


Edelweiss 4,454 15.1 1,326 13.5

Kotak 3,351 15.8 1,091 -6.6

HDFC 1,004 1,062


Edelweiss 2,101 15.3 1,364 7.7

Kotak 2,061 8.5 1,382 9.2

HDFC BANK 868 950


Edelweiss 7,496 18.6 2,462 24.2

Kotak 5,403 20.7 2,458 24.0

ICICI BANK 1,478 1,703


Edelweiss 7,467 20.2 2,788 18.5

Kotak 4,656 15.1 2,783 18.3

IDFC 140 161

BofA-Merrill Lynch 849 -4.4 411 -15.5

Edelweiss 915 15.4 495 1.6

Kotak 920 19.8 417 -9.6

KOTAK MAHINDRA BANK 1,013 981

BofA-Merrill Lynch 1,009 9.2 382 8.3

ICICI Securities 1,028 11.2 402 14.0

Motilal 1,019 10.3 432 22.5

PUNJAB NATIONAL BANK 926 1,018


Edelweiss 5,647 14.9 1,200 137.3

Kotak 4,345 8.2 1,406 178.2

STATE BANK OF INDIA 2,524 2,871


Edelweiss 18,042 16.2 3,204 34.9

Kotak 13,605 11.0 3,211 35.2

| Public sector bankslikely to lag privateones this quarter aswell

| Weak loan growth,other income to putrevenue growthunder pressure

| Stable cost of fundsto support netinterest margin

| Incrementalrestructuringexpected to be lowerthan earlier quarters but slippages and credit costs likelyto remain high

Research houses’ estimates for Q2FY15 in ~ crore; % change Y-o-Y; company name followed by its market price on October 14 and 12-month target price, in the order (source : Bloomberg). The list comprises Nifty companies. DDaattaa ccoommppiilleedd bbyy BBSS RReesseeaarrcchh BBuurreeaauu

BANK

S &

FIN

ANCE

Net sales % chg Net profit % chg Net sales % chg Net profit % chg

HCL TECHNOLOGIES 1,723 1,797


Edelweiss 8,846 11.1 1,754 23.8

Kotak 8,847 11.1 1,821 28.6

TCS 2,699 2,764


Edelweiss 24,013 14.5 5,297 12.7

Edelweiss 24,013 14.5 5,297 12.7

TECH MAHINDRA 2,372 2,479

BofA-Merrill Lynch 5,335 11.8 700 -2.6

Edelweiss 5,372 12.6 747 11.8

Edelweiss 5,372 12.6 747 11.8

WIPRO 580 624


Edelweiss 11,653 8.2 2,103 8.8

Kotak 11,780 7.2 2,103 8.8

| Improving visibility in theUS and higher offshoringfrom Europe will add to aseasonally-strong secondquarter

| Tata Consultancy Serviceslikely to outperform again,with sequential dollarrevenue growth of sevenper cent. Others might seethree-five per cent growth

IT S

ERVI

CES

Net sales % chg Net profit % chg

BHEL 226 192

Edelweiss 7,967 -11.3 252 -44.8

Kotak 7,781 -11.8 382 -16.3

ICICI Securities 7,177 -20.1 333 -27.0

LARSEN & TOUBRO 1,440 1,734

Edelweiss 13,366 8.6 916 6.1

Kotak 16,307 12.4 1,172 19.9


| While policy measures havebeen initiated and thesentiment has improved,these are unlikely to boostrevenue growth soon

| With the pace of projectexecution not showingsignificant pickup.Operational performance ofmost is likely to remain weak CA

PITA

LGO

ODS


CIPLA 579 564


Edelweiss 2,786 13.1 336 -6.3

Kotak 2,919 18.5 371 20.2

DR REDDY’S LABS 2,935 3,203


Edelweiss 3,796 13.1 530 -20.2

Kotak 3,670 9.3 567 -17.9

LUPIN 1,330 1,410


Edelweiss 3,187 19.0 582 28.4

Kotak 3,458 31.4 581 43.1

SUN PHARMACEUTICAL 803 883


Edelweiss 4,702 11.8 1,622 19.0

Kotak 4,785 14.2 1,841 35.1

| US growth to moderate for larger generic companies onthe higher base of last year, lower product approvals andhigher competition in key products

| While Sun Pharmaceutical and Dr Reddy’s will see lowerUS growth, better product mix and higher sales volumeswill power growth for Lupin, Cadila and Torrent

| Healthy double-digit growth in the domestic market, ledby the lower base of last year and price rises. Margins toshrink on competition, lower approvals & currency gains

PHAR

MAC

EUTI

CALS


HINDALCO 151 175


Edelweiss 7,375 17.0 226 -36.8

Kotak 8,325 32.0 455 27.4

JSJSPLPL 157 214

BofA-Merrill Lynch 4,925 -1.2 394 -31.1

Edelweiss 5,559 11.5 427 -5.5

Kotak 5,111 2.6 291 -36.1

NMDC 154 192

Edelweiss 3,089 24.6 1,586 20.3

Kotak 3,080 24.2 1,742 32.2

ICICI Securities 3,255 31.2 1,743 32.2

SESA STERLITE 250 299

BofA-Merrill Lynch20,462 13.5 1,735 41.2

Edelweiss 18,789 3.7 1,596 -53.3

Kotak 19,748 36.2 1,822 13.5

TATA STEEL 456 561

BofA-Merrill Lynch37,665 2.8 761 17.0

Edelweiss 36,645 -1.3 917 68.8

Kotak 36,925 0.8 860 -9.6

| Sluggish steel demand and softer prices might limitvolume and revenue growth for steel companies during the quarter

| Higher base metal (aluminum, zinc, etc) prices likely toboost revenues and profits of non-ferrous players

| Lower coal prices could boost profits of ferrous and non-ferrous companies; benefits of lower iron ore prices toaccrue to steel makers


ACC 1,383 1,531

Edelweiss 2,786 8.4 209 73.3

Kotak 2,911 16.0 207 71.1


AMBUJA CEMENTS 208 224

Edelweiss 2,152 6.7 181 9.1

Kotak 2,390 19.2 291 106.2


ULTRATECH 2,467 2,687

Edelweiss 5,322 17.7 378 43.1

Kotak 5,094 13.1 366 38.6


| Volume growth might bebetter on the low base oflast year and delayed rainsthis year

| Significant price rises in thesouth could add torevenues and profits ofcompanies there

CEM

ENT


NTPC 141 147


Edelweiss 17,827 9.6 1,820 -21.0

Kotak 16,444 1.1 2,019 -19.0

POWER GRID CORP 136 152

Edelweiss 4,118 3.0 1,218 10.6

Kotak 4,464 12.1 1,318 5.8


TATA POWER 87 100

Edelweiss 9,016 2.9 144 -29.8

Kotak 2,193 5.7 240 -30.5

ICICI Securities 8,730 -0.4 108 -57.1

| Subdued demand, coalavailability bottleneckscould limit revenue growthand profits

| A subdued plant load factormight look up on the back of the delayed monsoonthis year

POW

ER


ASIAN PAINTS 646 614


Edelweiss 3,550 14.0 373 14.0

Kotak 3,636 16.7 402 18.4

BHARTI AIRTEL 398 430

Edelweiss 23,327 9.4 1,279 149.9

Kotak 23,098 8.3 1,444 143.1


DLF 105 205


Kotak 1,990 1.7 167 102.9

Motilal 1,993 1.9 170 70.0

GRASIM INDUSTRIES3,394 3,932

Edelweiss 7,703 12.5 378 -16.0

Kotak 7,421 9.1 365 -18.9

Motilal 1,563 11.2 230 -41.9

ZEE ENTERTAINMENT 316 313


Edelweiss 1,170 6.2 209 -11.6

Kotak 1,137 3.2 211 -9.9

| Seasonality to impactvolume growth for thetelecom sector, impactingmargins. Bharti Airtel andIdea Cellular to see marginsdip 30-40 bps. Outlookpositive due to lowercompetition, pricing gainsand reducing churn

| Lower sales continue toimpact Mumbai and National Capital Region-baseddevelopers. Bangalore-based realty companies seehealthy volumes. Pickup of volumes in the festivalseason and launches are key for reversals

| For Asian Paints, robust performance to continue,driven by decorative paints demand, pickup in demandfor industrial products, price rises and weak crude oilprices

| Zee Entertainment's ad revenue growth expected to behealthy at 10-15 per cent and domestic subscriptiongrowth to be two-three per cent due to the delay indigitisation. Sport and new channels’ losses to pulldown overall profits

OTHE

RS


BPCL 656 702

Edelweiss 59,883 -3.1 904 -2.9

Kotak 59,998 -2.9 -1,075 PTL

Motilal 58,021 -6.1 481 -48.3

CAIRN INDIA 284 367

BofA-Merrill Lynch 4,098 -11.9 2,274 -26.5

Edelweiss 4,130 -11.2 2,548 -24.7

Kotak 4,049 -12.9 2,452 -27.6

COAL INDIA 344 390


Edelweiss 15,585 1.1 2,861 -6.3

Kotak 16,823 9.2 3,333 8.9

GAIL INDIA 447 437


Edelweiss 15,106 8.3 866 -5.4

Kotak 19,472 39.1 895 -2.3

ONGC 402 470

BofA-Merrill Lynch20,110 -10.3 3,920 -35.4

Edelweiss 19,004 -14.8 4,745 -21.7

Kotak 19,552 -12.8 4,563 -24.7

| Subsidy likely to fall 30-35 per cent, led by diesel pricerises and falling crude oil prices but uncertaintycontinues on subsidy sharing

| Better crude oil realisations to aid the profits of Oil andNatural Gas Corporation and Oil India

| Lower underrecoveries positive for oil marketingcompanies, but they are likely to see inventory losses


HINDUSTAN UNILEVER 731 665


Edelweiss 7,741 12.3 1,009 14.2

Kotak 7,690 11.6 987 11.8

ITC 347 401


Edelweiss 9,073 15.4 2,430 8.9

Kotak 8,983 15.5 2,381 13.6

| Volume growthexpected to remainsimilar compared toearlier quarters

| Lower raw materialprices are expectedto aid gross margins.Advertising spendsare expected to be higher on asequential basis

FMCG

Net sales % chg Net profit % chg Net sales % chg Net profit % chg

HERO MOTOCORP 2,852 2,859


Edelweiss 7,003 22.3 719 49.4

Kotak 6,958 21.5 659 37.0

M&M 1,274 1,385


Edelweiss 9,531 10.1 1,096 6.7

Kotak 8,969 3.6 895 -12.9

MARUTI SUZUKI 2,962 3,130


Edelweiss 12,131 15.9 902 34.5

Kotak 11,924 16.8 883 31.8

TATA MOTORS 488 573


Kotak 64,846 14.0 4,987 40.8


| Higher volumes acrosssegments aided bygradual recovery andprice rises shouldimprove sales

| Lower commodity costs,higher utilisation levelsand stabilisation ofdiscounts mightimprove profits

AUTO

MOB

ILES

MET

ALS

& M

ININ

G

ENER

GYRESULTS PREVIEW OF NIFTY COMPANIES

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16102014-dmy-11.qxd 10/15/2014 11:25 PM

healthy profits butrevenue growth lags

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