Healthy profits but revenue growth lags Nifty companies are expected to report another quarter of double-digit growth. Net profit growth at a bit over 11 per cent year-on-year is expected to be led by Bharti Airtel, Tata Motors, State Bank of India and Tata Consultancy Services. The growth will be lower than the June quarter’s 16 per cent. The moderation, also seen in the Nifty basket revenue growth as halving to five-seven per cent year-on- year, is largely because export-oriented sectors are not expected to benefit as much on account of a weak rupee for the September quarter. Further, higher growth in the domestic space is limited to automobile, cement and fast-moving consumer goods (FMCG) sectors. Revenue growth is expected to fall to single digit after four quarters of double-digit growth that peaked in the June quarter at 15 per cent. Operationally, though, the performance is estimated to improve. Given lower raw material costs, margins are expected to inch up 70-80 basis points year-on-year to 24 per cent. Analysts expect year-on-year earnings per share for Nifty companies to be ~458 for FY15, up 17 per cent, led by banking, auto, FMCG and information technology sectors. The FY15 earnings growth is expected to be led by lower commodity prices, economic recovery and lower inflation. Earnings before interest, taxes, depreciation and amortisation margins are expected to improve 200 basis points over two quarters. SI TEAM Net sales % chg Net profit % chg Net sales % chg Net profit % chg Net sales % chg Net profit % chg AXIS BANK 397 448 BofA-Merrill Lynch 3,313 12.8 1,598 17.3 Edelweiss 5,272 12.1 1,711 25.6 Kotak 3,274 11.5 1,705 25.1 BANK OF BARODA 872 1,013 BofA-Merrill Lynch 3,343 15.5 1,224 4.8 Edelweiss 4,454 15.1 1,326 13.5 Kotak 3,351 15.8 1,091 -6.6 HDFC 1,004 1,062 BofA-Merrill Lynch 1,823 25.0 1,350 6.6 Edelweiss 2,101 15.3 1,364 7.7 Kotak 2,061 8.5 1,382 9.2 HDFC BANK 868 950 BofA-Merrill Lynch 5,214 16.5 2,352 18.7 Edelweiss 7,496 18.6 2,462 24.2 Kotak 5,403 20.7 2,458 24.0 ICICI BANK 1,478 1,703 BofA-Merrill Lynch 4,600 13.8 2,672 13.6 Edelweiss 7,467 20.2 2,788 18.5 Kotak 4,656 15.1 2,783 18.3 IDFC 140 161 BofA-Merrill Lynch 849 -4.4 411 -15.5 Edelweiss 915 15.4 495 1.6 Kotak 920 19.8 417 -9.6 KOTAK MAHINDRA BANK 1,013 981 BofA-Merrill Lynch 1,009 9.2 382 8.3 ICICI Securities 1,028 11.2 402 14.0 Motilal 1,019 10.3 432 22.5 PUNJAB NATIONAL BANK 926 1,018 BofA-Merrill Lynch 4,395 9.5 1,382 173.4 Edelweiss 5,647 14.9 1,200 137.3 Kotak 4,345 8.2 1,406 178.2 STATE BANK OF INDIA 2,524 2,871 BofA-Merrill Lynch 13,206 7.8 3,051 28.4 Edelweiss 18,042 16.2 3,204 34.9 Kotak 13,605 11.0 3,211 35.2 | Public sector banks likely to lag private ones this quarter as well | Weak loan growth, other income to put revenue growth under pressure | Stable cost of funds to support net interest margin | Incremental restructuring expected to be lower than earlier quarters but slippages and credit costs likely to remain high Research houses’ estimates for Q2FY15 in ~ crore; % change Y-o-Y; company name followed by its market price on October 14 and 12-month target price, in the order (source : Bloomberg). The list comprises Nifty companies. Data compiled by BS Research Bureau BANKS & FINANCE Net sales % chg Net profit % chg Net sales % chg Net profit % chg HCL TECHNOLOGIES 1,723 1,797 BofA-Merrill Lynch 8,673 8.9 1,656 16.9 Edelweiss 8,846 11.1 1,754 23.8 Kotak 8,847 11.1 1,821 28.6 TCS 2,699 2,764 BofA-Merrill Lynch 23,796 13.4 5,24 69.9 Edelweiss 24,013 14.5 5,297 12.7 Edelweiss 24,013 14.5 5,297 12.7 TECH MAHINDRA 2,372 2,479 BofA-Merrill Lynch 5,335 11.8 700 -2.6 Edelweiss 5,372 12.6 747 11.8 Edelweiss 5,372 12.6 747 11.8 WIPRO 580 624 BofA-Merrill Lynch 11,609 7.8 2,089 8.1 Edelweiss 11,653 8.2 2,103 8.8 Kotak 11,780 7.2 2,103 8.8 | Improving visibility in the US and higher offshoring from Europe will add to a seasonally-strong second quarter | Tata Consultancy Services likely to outperform again, with sequential dollar revenue growth of seven per cent. Others might see three-five per cent growth IT SERVICES Net sales % chg Net profit % chg BHEL 226 192 Edelweiss 7,967 -11.3 252 -44.8 Kotak 7,781 -11.8 382 -16.3 ICICI Securities 7,177 -20.1 333 -27.0 LARSEN & TOUBRO 1,440 1,734 Edelweiss 13,366 8.6 916 6.1 Kotak 16,307 12.4 1,172 19.9 ICICI Securities 13,293 8.0 935 8.2 | While policy measures have been initiated and the sentiment has improved, these are unlikely to boost revenue growth soon | With the pace of project execution not showing significant pickup. Operational performance of most is likely to remain weak CAPITAL GOODS Net sales % chg Net profit % chg CIPLA 579 564 BofA-Merrill Lynch 2,797 11.3 341 -4.7 Edelweiss 2,786 13.1 336 -6.3 Kotak 2,919 18.5 371 20.2 DR REDDY’S LABS 2,935 3,203 BofA-Merrill Lynch 3,801 13.2 557 -10.1 Edelweiss 3,796 13.1 530 -20.2 Kotak 3,670 9.3 567 -17.9 LUPIN 1,330 1,410 BofA-Merrill Lynch 3,330 24.8 570 29.8 Edelweiss 3,187 19.0 582 28.4 Kotak 3,458 31.4 581 43.1 SUN PHARMACEUTICAL 803 883 BofA-Merrill Lynch 4,592 9.2 1,599 17.4 Edelweiss 4,702 11.8 1,622 19.0 Kotak 4,785 14.2 1,841 35.1 | US growth to moderate for larger generic companies on the higher base of last year, lower product approvals and higher competition in key products | While Sun Pharmaceutical and Dr Reddy’s will see lower US growth, better product mix and higher sales volumes will power growth for Lupin, Cadila and Torrent | Healthy double-digit growth in the domestic market, led by the lower base of last year and price rises. Margins to shrink on competition, lower approvals & currency gains PHARMACEUTICALS Net sales % chg Net profit % chg HINDALCO 151 175 BofA-Merrill Lynch 8,152 29.3 335 54.9 Edelweiss 7,375 17.0 226 -36.8 Kotak 8,325 32.0 455 27.4 JS JS PL PL 157 214 BofA-Merrill Lynch 4,925 -1.2 394 -31.1 Edelweiss 5,559 11.5 427 -5.5 Kotak 5,111 2.6 291 -36.1 NMDC 154 192 Edelweiss 3,089 24.6 1,586 20.3 Kotak 3,080 24.2 1,742 32.2 ICICI Securities 3,255 31.2 1,743 32.2 SESA STERLITE 250 299 BofA-Merrill Lynch20,462 13.5 1,735 41.2 Edelweiss 18,789 3.7 1,596 -53.3 Kotak 19,748 36.2 1,822 13.5 TATA STEEL 456 561 BofA-Merrill Lynch37,665 2.8 761 17.0 Edelweiss 36,645 -1.3 917 68.8 Kotak 36,925 0.8 860 -9.6 | Sluggish steel demand and softer prices might limit volume and revenue growth for steel companies during the quarter | Higher base metal (aluminum, zinc, etc) prices likely to boost revenues and profits of non-ferrous players | Lower coal prices could boost profits of ferrous and non- ferrous companies; benefits of lower iron ore prices to accrue to steel makers Net sales % chg Net profit % chg ACC 1,383 1,531 Edelweiss 2,786 8.4 209 73.3 Kotak 2,911 16.0 207 71.1 ICICI Securities 2,735 9.0 204 71.5 AMBUJA CEMENTS 208 224 Edelweiss 2,152 6.7 181 9.1 Kotak 2,390 19.2 291 106.2 ICICI Securities 2,362 17.8 278 67.8 ULTRATECH 2,467 2,687 Edelweiss 5,322 17.7 378 43.1 Kotak 5,094 13.1 366 38.6 ICICI Securities 5,191 15.3 424 60.6 | Volume growth might be better on the low base of last year and delayed rains this year | Significant price rises in the south could add to revenues and profits of companies there CEMENT Net sales % chg Net profit % chg NTPC 141 147 BofA-Merrill Lynch 2,144 32.7 912 21.8 Edelweiss 17,827 9.6 1,820 -21.0 Kotak 16,444 1.1 2,019 -19.0 POWER GRID CORP 136 152 Edelweiss 4,118 3.0 1,218 10.6 Kotak 4,464 12.1 1,318 5.8 ICICI Securities 4,247 6.2 1,249 0.8 TATA POWER 87 100 Edelweiss 9,016 2.9 144 -29.8 Kotak 2,193 5.7 240 -30.5 ICICI Securities 8,730 -0.4 108 -57.1 | Subdued demand, coal availability bottlenecks could limit revenue growth and profits | A subdued plant load factor might look up on the back of the delayed monsoon this year POWER Net sales % chg Net profit % chg ASIAN PAINTS 646 614 BofA-Merrill Lynch 3,550 14.0 386 18.0 Edelweiss 3,550 14.0 373 14.0 Kotak 3,636 16.7 402 18.4 BHARTI AIRTEL 398 430 Edelweiss 23,327 9.4 1,279 149.9 Kotak 23,098 8.3 1,444 143.1 ICICI Securities 23,154 8.5 1,296 153.2 DLF 105 205 BofA-Merrill Lynch 2,150 9.9 130 29.9 Kotak 1,990 1.7 167 102.9 Motilal 1,993 1.9 170 70.0 GRASIM INDUSTRIES3,394 3,932 Edelweiss 7,703 12.5 378 -16.0 Kotak 7,421 9.1 365 -18.9 Motilal 1,563 11.2 230 -41.9 ZEE ENTERTAINMENT 316 313 BofA-Merrill Lynch 1,236 12.2 243 2.7 Edelweiss 1,170 6.2 209 -11.6 Kotak 1,137 3.2 211 -9.9 | Seasonality to impact volume growth for the telecom sector, impacting margins. Bharti Airtel and Idea Cellular to see margins dip 30-40 bps. Outlook positive due to lower competition, pricing gains and reducing churn | Lower sales continue to impact Mumbai and National Capital Region-based developers. Bangalore-based realty companies see healthy volumes. Pickup of volumes in the festival season and launches are key for reversals | For Asian Paints, robust performance to continue, driven by decorative paints demand, pickup in demand for industrial products, price rises and weak crude oil prices | Zee Entertainment's ad revenue growth expected to be healthy at 10-15 per cent and domestic subscription growth to be two-three per cent due to the delay in digitisation. Sport and new channels’ losses to pull down overall profits OTHERS Net sales % chg Net profit % chg BPCL 656 702 Edelweiss 59,883 -3.1 904 -2.9 Kotak 59,998 -2.9 -1,075 PTL Motilal 58,021 -6.1 481 -48.3 CAIRN INDIA 284 367 BofA-Merrill Lynch 4,098 -11.9 2,274 -26.5 Edelweiss 4,130 -11.2 2,548 -24.7 Kotak 4,049 -12.9 2,452 -27.6 COAL INDIA 344 390 BofA-Merrill Lynch15,686 1.8 3,121 1.9 Edelweiss 15,585 1.1 2,861 -6.3 Kotak 16,823 9.2 3,333 8.9 GAIL INDIA 447 437 BofA-Merrill Lynch16,280 16.3 1,176 39.8 Edelweiss 15,106 8.3 866 -5.4 Kotak 19,472 39.1 895 -2.3 ONGC 402 470 BofA-Merrill Lynch20,110 -10.3 3,920 -35.4 Edelweiss 19,004 -14.8 4,745 -21.7 Kotak 19,552 -12.8 4,563 -24.7 | Subsidy likely to fall 30-35 per cent, led by diesel price rises and falling crude oil prices but uncertainty continues on subsidy sharing | Better crude oil realisations to aid the profits of Oil and Natural Gas Corporation and Oil India | Lower underrecoveries positive for oil marketing companies, but they are likely to see inventory losses Net sales % chg Net profit % chg HINDUSTAN UNILEVER 731 665 BofA-Merrill Lynch 7,832 13.6 1,001 13.4 Edelweiss 7,741 12.3 1,009 14.2 Kotak 7,690 11.6 987 11.8 ITC 347 401 BofA-Merrill Lynch 8,796 11.9 2,401 14.4 Edelweiss 9,073 15.4 2,430 8.9 Kotak 8,983 15.5 2,381 13.6 | Volume growth expected to remain similar compared to earlier quarters | Lower raw material prices are expected to aid gross margins. Advertising spends are expected to be higher on a sequential basis FMCG Net sales % chg Net profit % chg Net sales % chg Net profit % chg HERO MOTOCORP 2,852 2,859 BofA-Merrill Lynch 6,983 21.9 670 39.1 Edelweiss 7,003 22.3 719 49.4 Kotak 6,958 21.5 659 37.0 M&M 1,274 1,385 BofA-Merrill Lynch 9,271 3.8 927 -6.3 Edelweiss 9,531 10.1 1,096 6.7 Kotak 8,969 3.6 895 -12.9 MARUTI SUZUKI 2,962 3,130 BofA-Merrill Lynch 12,350 18.0 857 27.9 Edelweiss 12,131 15.9 902 34.5 Kotak 11,924 16.8 883 31.8 TATA MOTORS 488 573 BofA-Merrill Lynch 62,705 10.2 4,750 24.5 Kotak 64,846 14.0 4,987 40.8 ICICI Securities 60,961 7.2 4,156 17.3 | Higher volumes across segments aided by gradual recovery and price rises should improve sales | Lower commodity costs, higher utilisation levels and stabilisation of discounts might improve profits AUTOMOBILES METALS & MINING ENERGY RESULTS PREVIEW OF NIFTY COMPANIES . <