Delayed monsoon, a consumption slowdown and volatility in commodity prices on account of the trade war between the U.S. and China are likely to drag down India Inc.'s June-quarter earnings.
Analysts expect cement makers and pharmaceutical companies to outperform during the three months ended June, while the operational performance of automakers and oil marketers are expected to drop during the period due to fall in volumes and lower refining margin, among other factors. The earnings season kicked off on July 9 with Tata Consultancy Services reporting its lowest margins on higher wage costs.
Here are large- and mid-cap stocks, according to analyst forecasts tracked by Bloomberg, that may report the best and the worst operational performance in the April-June period.
Methodology
- Stocks tracked by at least 10 analysts.
- Stocks for which first-quarter estimates are available on Bloomberg.
- Of the 150 stocks that met the criteria, 130 are expected to report a revenue growth and 108 are expected to witness a growth in their operating profit, or earnings before interest, tax, depreciation and amortisation.
The 10 stocks expected to witness the highest jump in Ebitda:
- Biocon: Continued momentum in biosimilars and better performance of subsidiary Syngene International Ltd. is expected to aid the parent's Ebitda growth.
- Orient Cement: Higher cement prices and volume growth, focus on cost cuts and capacity expansion will lead to growth in operating profit.
- Ipca Laboratories: Higher exports of anti-malaria drugs and dispersible tablets—that disintegrate in water—cost cuts, a better product mix and pricing may boost the company's Ebitda growth.
- Dixon Technologies: Ramp-up of volume, coupled with a strong revenue growth from key business verticals—consumer electronics and lighting products—will drive Ebitda growth.
- TeamLease: Contribution from recently acquired eCentric Solutions Pvt. Ltd., operating leverage from specialised staffing business and reversals of previous write-offs in human resource services segment will aid its operating profit.
The 10 stocks expected to witness the biggest decline in Ebitda:
- OMCs: Inventory losses and lower gross refining margins would lead to a drop in operating profit during the quarter.
- Maruti Suzuki: Decline in volume, rise in commodity costs, negative operating leverage and higher fixed costs in Gujarat plant are expected to weigh on the company's operating profit.
- Oberoi Realty: High base in last year and muted sales from its Mulund and Goregaon projects may drag down the performance.
- Finolex Industries: Fall in product spreads—the difference between the cost of raw material and selling price—due to more than 12 percent decline in prices of plastic is expected to weigh on the company's operating profit.
- JSW Steel: Seasonality, sluggish domestic demand and lower steel prices may lower operating profit in the first quarter.
(The reasons on Ebitda performance forecast in the first quarter compiled from the research notes of Antique Broking, IIFL, Edelweiss and Kotak Securities, among others)
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