Mumbai: CovidNa expects the second wave, along with regional locks, to dampen the Q1FY22 earnings season, thus triggering volatility.
The trend could remarkably lead to value correction, which in theory could cause a further bull run.
However, the extent of this expected trend can only be known by the impact on revenue that different sectors have accrued in terms of the effect of the closure on operations and sales.
Other factors such as high commodity and fuel prices coupled with the impact of the countryside Covid distribution on the FMCG demand will put pressure on the first quarter.
In contrast, pharmaceutical companies can benefit from the second Covid wave, except that metals, BFSI and IT are expected to drive earnings growth in Q1FY22.
Furthermore, in Q1FY22, Indian companies had the advantage of a low base, while the total net sales of most companies fell sharply during Q1FY21 and their net profit fell.
‘In Q1FY22, however, there was a disruption or partial exclusion in April or May due to the second Covid golf, the impact of this on business operations does not seem as severe as last year. States were also well prepared this time to deal with the situation, ”says Deepak Jasani, head of retail research at HDFC Securities.
‘The trends in the shift from informal to formal sectors, the impact of rising commodity prices and inventory gains or losses due to China’s intervention in commodity markets, will be interesting to note. In the BFS space, the trends of asset quality or slippage in the books of borrowers will be closely monitored. ”
In addition, Jasani said several high-frequency macro indicators have improved in recent times, including power consumption, demand for motor fuel, e-road bills and exports.
“Rising commodity costs, higher inflation and a probable rate hike are the most important aspects.”
According to Gaurav Garg, Head of Research at CapitalVia Global Research: “The season opener was good by TCS, it achieved a net profit growth of 28.5 percent, and it also had a growth of 18.5 percent in the consolidated income. “
“However, this earnings season may have few surprises, as it coincides with the second wave of the pandemic and therefore there may be mixed results.”
Garg warned investors to be prepared for mixed results due to the pandemic constraints in the previous quarter. This may not be comprehensive, given the previous exclusion, but some impact is still expected.
“Markets seem to be correcting themselves of their resistance, and positive earnings may be the required stimulus to further boost the market.”
In a report, Crisil Research expects India Inc to have a successive decline of 8-10 percent in revenue at $ 7.3 million. For the first quarter of this fiscal will report.
The decline can be led by products at the discretion of consumers, such as cars, which the volume affected by the closures in countries, the second wave of Covid-19 infections.
Nevertheless, according to Crisil Research, revenue will increase by 45-50 percent annually on a low basis.
The report pointed out that improvement can be seen in sectors, with higher volume on a low basis and greater realizations due to rise in commodity prices.
If the commodity sectors are calculated, annual revenue growth will be lower at 37-40 percent, the report said.
Source: Telangana Today