Axis Bank, Bajaj Finance among top earnings upgrades in September quarter; IndusInd Bank sees major downgrade

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Published: November 22, 2018 5:08:29 PM

Shares of private sector lender Axis Bank and NBFC firm Bajaj Finance have seen healthy earnings upgrades in the latest quarter, according to a report.

While the earnings have largely been in-line with expectations, PSU banks and telecom stocks have been the major disappointments.

Shares of private sector lender Axis Bank and NBFC firm Bajaj Finance have seen healthy earnings upgrades in the latest quarter, according to a report. In its latest ‘India Strategy and Earnings Review’ report, Motilal Oswal said that for the September quarter, earnings were largely led by commodity sector, with Metals and Oil & Gas accounting for more than 72% of incremental earnings growth for in the brokerage firms universe. Notably, while the earnings have largely been in-line with expectations, PSU banks and telecom stocks have been the major disappointments. 

Axis Bank has seen a healthy upgrade of 11% while Bajaj Finance’s earnings have been upgraded by 7.6% by the brokerage firm. Aditya Birla Group’s subsidiary firm Hindalco has also seen a healthy upgrade of 6.6%. Taking stock of the various downgrades in the quarter, Motilal Oswal said, “Tata Motors, Ultratech Cement, IndusInd Bank and Cipla have seen EPS downgrades of 78.9%, 22%, 17.7% and 16.8%, respectively.”

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“73 companies saw earnings cut of 3%+ (90 in 1QFY19), while 38 companies saw upgrades of 3%+ (39 in 1QFY19). Our FY19/20 Nifty EPS estimates have been cut by 4.4/2.9% to  Rs 515/655 v/s INR 539/674 earlier. We expect Nifty EPS to increase 13.1% in FY19. Nearly 70% of the earnings cut is driven by Tata Motors, IOC, Reliance and ONGC,” noted the research firm in its report.

Motilal Oswal said that one of the key positives from this earnings season was the improving revenue growth trajectory. “Top-line growth for MOSL Universe and Nifty was at a multi-quarter high. However, it failed to translate into concomitant EBITDA growth, underscoring the erosion in pricing power in an inflationary input cost environment,” said the report.

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