March quarter earnings of the Nifty50 and other companies have been impacted by the ongoing COVID-19 pandemic. As per a recent report by Credit Suisse, Nifty FY20 EPS (earnings per share) was around 400, down 9 percent when compared the same period in last fiscal, to the same level as FY18. It is around 40 percent below 650 where it started 2.5 years back, it added.
CLSA also noted that Q4 was the 22nd consecutive quarter of cuts. "The Nifty showed a record 23 percent/10 percent cuts in FY21/FY22 consensus EPS. Nearly 90 percent of our broader 140-stock universe showed cuts in FY22 consensus PAT," CLSA said in a note.
Going ahead Credit Suisse said that the consensus expects FY21/22 growth at 16 percent/38 percent.
"All the 64-point jump in Nifty FY21 EPS is expected from banks
(+80) and telecom (+18), with year on year declines in NBFCs, Metals, IT and
Industrials. A full revival is expected in FY22 with banks’ share of growth falling to 37 percent and discretionary and energy contributing 15-20 percent each," it stated.
As of now, CS noted that apart from Pharma and Telecom (least impact of lockdown), every other sector saw cuts to FY20. By quantum most cuts to FY21 came from Private Banks, Discretionary, Energy, Metals and NBFCs, it added.
The trend for FY22 cuts was also similar. FY21 saw deeper cuts than FY20, and FY22 slightly lower, but growth estimates for the Nifty EPS remain elevated at 16 percent and 38 percent, respectively, in FY21 and 22.
Among stocks, CLSA said that with an FY21/22 PAT cut of 68 percent/32 percent, autos were the worst hit. Tata Motors, Maruti and Eicher showed the biggest cuts in FY22 PAT amongst Nifty names. Meanwhile, At 42 percent/28 percent cut, banks and financials were also hit badly, led by SBI, Indusind, Axis and Bajaj Finance, it added.
However, only six Nifty names showed FY22 PAT upgrades. Dr. Reddy's, followed by NTPC, Bharti Airtel, Cipla, Power Grid and Britannia, the CLSA report mentioned.
First Published: Jul 3, 2020 1:51 PM IST
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