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ICICI Securities : Result Preview: 3Q FY2011 (December 2010 quarter or 4Q CY2010)
Expectations in the price, outlook the key driver
(click on sector below for detailed report)
Auto and auto ancillary
ƒ EBITDA the key monitorable despite robust revenue growth
Despite stronger YoY growth in revenues, Indian companies are
likely to face pressure on their bottomline owing to the high base
effect of Q3FY10. We expect our coverage universe to post ~22%
YoY and ~6% QoQ growth in revenues. The impact of rising input
prices and other operating expenses will keep EBITDA growth
at10% YoY for our universe. Similarly, rising borrowing cost will be
the added pressure point for Corporate India in Q3FY11E. This is
clearly indicated by the meagre PAT growth of 2% YoY. Indian
markets, meanwhile, are in a correction mode and have
underperformed their emerging peers on the back of rising inflation
and an anticipated monetary action from the RBI. As per threemonth returns perspective, IT, healthcare and FMCG are the only
sectors that have generated positive returns. On the other hand,
rate sensitive sectors such as realty and financials were the
laggards. Going ahead, we believe a stock specific approach will
play out in H1CY11 where companies delivering consistent financial
performance will attract investor interest.
ƒ Topline growth to be healthy but margins under pressure
The ICICIdirect.com universe (ex-banking and NBFCs) is expected to
post healthy revenue growth of 21.8% YoY and 5.4% QoQ. Banking
and NBFCs would also post 27.2% YoY and 1.6% QoQ revenue
growth primarily on the back of healthy credit growth during the
quarter. EBITDA would grow 9.7% YoY. However, margins would
contract by 242 bps on the back of rising input cost. Nonetheless,
on a QoQ basis, margins are expected to contract by a mere 82 bps
indicating improving cost rationalisation measures amid steadily
increasing raw material costs. Consequently, we expect our
coverage universe to report PAT growth of 1.3% YoY. However, on
a QoQ basis, it will post 5.2% growth. For financials, we expect the
PPP and PAT to grow by 32.0% YoY 20.0%, respectively.
ƒ Sectoral leaders and sectoral laggards
Outperforming sectors of the last quarter are expected to continue
the good show with robust revenue growth - oil & gas (73% YoY),
banking (28% YoY), autos (27% YoY) and capital goods (27% YoY).
On the other hand, metals and pipes would witness subdued single
digit growth. On the margins front, we expect auto, cement and
power to witness highest margin pressure owing to a rise in input
costs. In terms of PAT growth, we expect media (27% YoY) oil &
gas (26% YoY) and pharma (20% YoY) to lead the growth.
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