Brokerage house CLSA, in a recent note, said that the profit before tax (PBT) for Indian stocks under its coverage is expected to rise 6 percent YoY on the back of strong demand after the easing of lockdown restrictions. This rise in profit is despite a high growth base from the same quarter previous year.
As per CLSA, metals, cement, healthcare, auto (ex-Tata Motors) and PSU refiners will show the highest YoY PBT growth. However, financials, RIL, property and media s likely to see YoY PBT cuts, it added.
"This good growth, along with a big reduction in telecom losses, will allow domestic-focused companies, ex-financials, to see 17 percent YoY PBT growth, the highest in over 30 quarters. Commentary on asset quality by banks and the demand outlook beyond this quarter for most other sectors will be keenly tracked," the brokerage observed.
CLSA further noted that ex-financials, revenue is likely to rise 8 percent YoY in the December quarter auto, cement, consumer and telecom after flat-to-negative YoY growth over the past five quarters. Meanwhile, it added that EBITDA margins may rise 35 bps YoY driven by cement and metals.
Record margins will boost the profit of steel stocks while strong demand will help cement companies, CLSA stated. It further noted that healthy revenue growth, good US performance and cost control will also boost pharma while inventory gains will aid the oil marketing companies' profit.
Also, strong festive demand and up-stocking of durables will drive double-digit growth in PBT of discretionary names and deal ramp-up will drive IT stock profit growth while order-books will be keenly watched.
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