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Towards the end of the downhill ride
Elara coverage universe to show 16.2 % revenue growth
We expect the Elara coverage universe to report a 16.2% revenue
growth (including downstream oil and gas) with flattish margins. Ex of
downstream oil and gas, there is still 170bps yoy margin dip. Though
most of the sectors still continue to report margin dips, margin
expansion in consumption (FMCG and two wheelers) and cement
have limited the fall. Also, the rupee depreciation fillip has taken the
wind out of the steep margin contraction on metals, pharma and IT
services. Cement will continue its strong showing as higher rural
demand along with softer input prices is expected to result in 44.4%
PAT growth. Ex of our preview numbers, our banking analyst expects
bank earnings growth to soften led by both muted loan growth and
stable NIMs. We believe that the asset cycle deterioration has
bottomed out and focus will now shift to movement in restructured
assets. In line with our model portfolio we expect the outperformance
of private over public to continue.
Heads up on the possible portfolio changes for the quarter
While FMCG (seasonally strong quarter), a key overweight in our
model portfolio, continues to show strong 21.4% PAT growth and
EBITDA margin expansion; we feel that full valuations might lead us to
cut the extent of our OWs. We would also cut our Infosys OW before
the guidance but an OW on IT through TCS and HCL Tech. Other than
Hindustan Zinc, we continue to be negative on both the ferrous and
the non-ferrous pack. In the cement space, we prefer players using
petcoke like Shree Cement, JK Lakshmi, JK Cement and Ultratech on
softening petcoke. Price action in ACC might also lead us to change
our negative view post quarter numbers. Other than our recent Cairn
upgrade, we maintain our cautious medium term stance on the oil and
gas sector with a negative view on RIL.
Our top picks are across bottom up rather than sector specific
Our top picks include ITC, HUVL, Grasim, TCS, HCL Tech, BPCL, HPCL,
HMCL, Hero Motocorp, Grasim, Berger Paints, Sadbhav and ITNL.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Towards the end of the downhill ride
Elara coverage universe to show 16.2 % revenue growth
We expect the Elara coverage universe to report a 16.2% revenue
growth (including downstream oil and gas) with flattish margins. Ex of
downstream oil and gas, there is still 170bps yoy margin dip. Though
most of the sectors still continue to report margin dips, margin
expansion in consumption (FMCG and two wheelers) and cement
have limited the fall. Also, the rupee depreciation fillip has taken the
wind out of the steep margin contraction on metals, pharma and IT
services. Cement will continue its strong showing as higher rural
demand along with softer input prices is expected to result in 44.4%
PAT growth. Ex of our preview numbers, our banking analyst expects
bank earnings growth to soften led by both muted loan growth and
stable NIMs. We believe that the asset cycle deterioration has
bottomed out and focus will now shift to movement in restructured
assets. In line with our model portfolio we expect the outperformance
of private over public to continue.
Heads up on the possible portfolio changes for the quarter
While FMCG (seasonally strong quarter), a key overweight in our
model portfolio, continues to show strong 21.4% PAT growth and
EBITDA margin expansion; we feel that full valuations might lead us to
cut the extent of our OWs. We would also cut our Infosys OW before
the guidance but an OW on IT through TCS and HCL Tech. Other than
Hindustan Zinc, we continue to be negative on both the ferrous and
the non-ferrous pack. In the cement space, we prefer players using
petcoke like Shree Cement, JK Lakshmi, JK Cement and Ultratech on
softening petcoke. Price action in ACC might also lead us to change
our negative view post quarter numbers. Other than our recent Cairn
upgrade, we maintain our cautious medium term stance on the oil and
gas sector with a negative view on RIL.
Our top picks are across bottom up rather than sector specific
Our top picks include ITC, HUVL, Grasim, TCS, HCL Tech, BPCL, HPCL,
HMCL, Hero Motocorp, Grasim, Berger Paints, Sadbhav and ITNL.
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