Dr Reddy's Labs, ICICI Bank, State Bank of India and HDFC reported profit whileon the other hand, Bharti Airtel disappointed the Street.Quite a number of companies have declared their numbers for the June quarter, which include top names that have either surprised or disappointed the Street.
However, experts say that there is a possibility that double-digit earnings growth could be seen after the September quarter.
Dr Reddy's Labs, ICICI Bank, State Bank of India and HDFC reported profit while on the other hand, Bharti Airtel disappointed the Street.
“Earnings have been a mixed bag but more importantly the commentary post earnings has been not encouraging, which is a cause of concern. The hits are quite clear like Asian Paints, ICICI Bank, Dabur, Infosys, HUL and Reliance Industries,” Naveen Kulkarni, Head of Research, Reliance Securities told Moneycontrol.
“However, there have been quite a few misses like Axis bank, MMFS and auto stocks. The misses have been more than the hits at this juncture,” he said.
The June quarter is likely to mimic the March quarter with financials leading the growth, while consumer discretionary, consumer staples, industrials, material, and real estate could well post declining trend sequentially in the top-line growth.
Sectors like auto and auto ancillaries, consumer discretionary and FMCG will get affected by the slowdown in demand.
Bharti Airtel: Profit turns to loss
Telecom major Bharti Airtel on August 1 reported a consolidated net loss of Rs 2,866 crore for the quarter that on ended June 2019, as against a profit of Rs 107.2 crore for the quarter that ended on March 2019. Revenue of the company was up marginally at Rs 20,737.9 crore versus Rs 20,602.2 crore.
The earnings before interest, tax, depreciation and amortization (EBITDA) grew 24.8 percent to Rs 8,492.6 crore as against Rs 6,806.4 crore. However, the margin expanded by 700 bps to 41 percent, up from 33 percent.
Global research firm Morgan Stanley has an equal-weight on the stock with target at Rs 360 per share. CLSA has a buy rating, but has cut its target to Rs 390, down from Rs 415 per share and has cut EBITDA estimates by 2-5 percent to factor in higher costs.
Dr Reddy's Labs: Net profit up 45 percent YoY
Dr Reddy's Laboratories on June 29 reported a net profit of Rs 662.8 crore for the quarter that ended on June 31, a jump of 45 percent year-on-year basis, which was led by a one-time gain. The increase in net profit is due to a one-off receipt of Rs 350 crore from Celgene, pursuant to a settlement agreement related to Revlimid brand capsules in Canada. Revenues grew 3 percent YoY at Rs 3,843.4 crore.
The company said that growth was led by contribution from new products and increase in volumes, but was partly offset by price erosion and adverse foreign exchange movement.
BofAML has a buy rating on the stock with target at Rs 3,052 signalling an upside of 15 percent, while Nomura also has a buy with target at Rs 3285.
ICICI Bank: Profit backed by lower provisioning, healthy NII growth
ICICI Bank posted a profit of Rs 1,908 crore for the June quarter (Q1) over lower provisioning and healthy NII growth. It was against a loss of Rs 119.55 crore reported in the year-ago period and a profit of Rs 969.06 crore for the previous quarter. The profit was partly impacted by lower other income.
Net interest income grew (NII) by 26.8 percent year-on-year to Rs 7,737.43 crore for quarter that ended on June 2019 with a healthy loan growth of 15 percent YoY, which beat analyst expectations. NII was expected at Rs 7,427.1 crore, according to a poll of analysts conducted by CNBC-TV18.
Research house Jefferies has retained a buy call on ICICI Bank and raised its target price to Rs 480, up from Rs 455 per share. According to CLSA the company is a high-conviction buy with target at Rs 530 per share.
State Bank of India: Standalone profit of Rs 2,312.20 crore
State Bank of India reported a standalone profit of Rs 2,312.20 crore for the quarter ended June 2019, aided by lower provisioning with stable asset quality. Higher other income and operating income also boosted profitability, though tepid NII growth limited profits.
The bank had reported a loss of Rs 4,875.85 crore in the corresponding period last fiscal. On a quarter-on-quarter basis, it reported a whopping 176 percent jump in profit against Rs 838.40 crore in March quarter. Net interest income grew by 5.2 percent year-on-year to Rs 22,938.8 crore in June quarter 2019.
HDFC: 46 percent jump in profit at Rs 3,203.10 crore
Housing Development Finance Corporation (HDFC) has reported 46 percent jump in its Q1FY20 net profit at Rs 3,203.10 crore against Rs 2,190 in the same quarter last year. Revenue of the company was up 30.6 percent at Rs 12,990.29 crore against Rs 9,947.35 crore
The profit from the sale of investments was at Rs 1,894 crore, while impairment on financial instruments at Rs 890 crore versus Rs 20 crore, YoY.
Axis Bank: Sharp rise in profit
Private sector lender Axis Bank's profit for the June quarter (Q1) grew sharply by 95 percent year-on-year to Rs 1,370 crore, but provisioning and slippages remained higher. It was supported by NII, other income and operating profit. The profitability was higher due to the low base in a year-ago period. The bank had reported a profit of Rs 701 crore in Q1FY19.
Net interest income increased 13 percent year-on-year to Rs 5,843.65 crore in the quarter ended June 2019, with 13 percent loan growth YoY. Gross slippages remained higher at Rs 4,798 crore at the end of June quarter 2019, against Rs 4,337 crore in the corresponding period of the last fiscal and Rs 3,012 crore in Q4FY19.
Hero MotoCorp: Brokerages mixed after jump in profit
Hero MotoCorp reported a whopping 38.3 percent year-on-year (YoY) increase in June quarter profit on account of one-time gain with respectto reversal of a calamity fund. Profit during the quarter increased to Rs 1,256.7 crore, up from Rs 909.2 crore in the corresponding period of last
fiscal.
Revenue from operations declined 8.8 percent YoY to Rs 8,030.3 crore in the quarter ended June 2019, with sales volume degrowth at 12.5 percent YoY.
Credit Suisse maintained its outperform rating on Hero MotoCorp quarter results, but slashed its target price to Rs 2,710, down from Rs 2,920 earlier. Morgan Stanley maintained its underweight call on Hero MotoCorp after the announcement of its Q1 results, but reduced its target price to Rs 2,143 from, down from Rs 2,459 earlier.
Tech Mahindra: Profit dips 15.3 percent
Tech Mahindra on July 30 reported a 15.3 percent fall in its Q1FY20 net profit at Rs 959 crore against Rs 1,132.5 crore for the quarter that ended on March 2019. The company's rupee revenue was down 2.7 percent quarter-on-quarter (QoQ) at Rs 8,653 crore as against Rs 8,892.3 crore and dollar revenue was down 1.6 percent at $1,247.1 million against $1,267.5 million QoQ.
Earnings before interest and taxes (EBIT) fell 27.4 percent at Rs 992.8 crore, while margin was down 390 bps at 11.5 percent. In the constant currency terms, the revenue growth was at 3.7 percent.
Citi has a neutral rating with target at Rs 705, while Credit Suisse has an outperform rating with target cut to Rs 730 per share.
Ashok Leyland: Nomura stays neutral despite PAT of Rs 274.96 crore
Hinduja Group flagship Ashok Leyland has recorded consolidated net profit for the April-June 2019 period at Rs 274.96 crore.The city-based heavy commercial vehicle major clocked consolidated net profit at Rs 463.78 crore during the same period last fiscal.
For the financial year ending March 31, 2019, consolidated net profit was at Rs 2,194.60 crore. Total income for the April-June quarter was at Rs 6,612.42 crore as against Rs 7,193.79 crore registered year ago.
Nomura has maintained neutral rating on the stock and cut the target price to Rs 72 per share. The research house sees risk of a steeper downcycle and is not expecting an upcycle before FY22.
Source: https:// www.moneycontrol.com/news/business/markets/india-inc-performance-the-hits-and-misses-of-june-quarter-earnings-4282481.html
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