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Five Nifty firms that may clock 100-500% profit growth in Q2


NEW DELHI: The economic recovery since the June quarter– one of the worst in India’s corporate history – would not be enough to drive Nifty50’s September quarter profit back into the black. Initial projections suggest a 5 per cent de-growth in combined profit of Nifty50 firms.

But at least five index companies may still report 100-500 per cent growth in second quarter profits, thanks to factors such as low base, higher other income, forex gains and recent acquisition.

They include ICICI Bank, IndiaOil (IOC), Ultratech Cement, SBI Life Insurance and JSW Steel.

ICICI Bank’s numbers are expected to get a boost from a low base. IOC is expected to get a profit bump on account of inventory gains. In the case of UltraTech, the number would be aided by the recent acquisition of Century’s cement business. SBI Life is seen benefitting from a low base and relatively better growth momentum for group insurance policies. In the case of JSW Steel, higher prices would aid quarterly earnings.

ICICI Bank’s September quarter profit last year fell 27.90 per cent to Rs 654.96 crore due to one-time additional charge on account of re-measurement of accumulated deferred tax. This time, such an exceptional loss is unlikely.

Motilal Oswal expects the private lender to report Rs 2,812.90 crore profit for the quarter, up 329.5 per cent YoY. Loan growth for the quarter is expected to moderate and so are the margins. Net interest income (NII) is seen rising 18 per cent to Rs 9510 crore, Motilal Oswal said.

IOC is set to see strong numbers on a reversal of inventory losses after the June quarter.

Brokerage JM Financial expects IOC to report a 517 per cent jump in net profit at Rs 3,479 crore compared with Rs 563.40 crore reported for the same quarter last year. Sales are likely to grow at a modest 5.7 per cent to Rs 1,39,822 crore. The numbers may include crude inventory gain of Rs 1,570 crore and product inventory gain of Rs 1,280 crore.

For JSW Steel, Kotak Institutional Equities sees a 208 per cent spike in net consolidated profit at Rs 1,505 crore from Rs 488 crore (adjusted profit) in the same quarter last year.

“We expect JSW Steel to report a 7 per cent YoY volume increase on improved domestic demand post national lockdowns. We estimate steel realisation to grow 11 per cent sequentially (down 2 per cent YoY) due to higher domestic volumes, lower exports and higher domestic prices on opening of the markets post the lockdowns,” it said.

Brokerage Motilal Oswal said UltraTech’s numbers are expected to improve, driven by a turnaround at its acquisition (Century assets) setting up of work-from-home capacities to reduce power consumption.

The brokerage sees UltraTech’s net profit to rise 104 per cent to Rs 1,181.40 crore on a 3.5 per cent rise in sales at Rs 9,956.20 crore. The company is seen reporting 3.9 per cent rise in volumes at 19.1 million tonnes for September quarter (up 32.5 per cent QoQ). Realisations are expected to drop by Rs 18 YoY (down Rs 81 QoQ) to Rs 5,129 per tonne, but Ebidta is seen rising by Rs 288 YoY (down Rs 102) to Rs 1,314 per tonne.

SBI Life’s September quarter earnings last year were not good. It had reported a 48 per cent slide in its net profit to Rs 129.84 crore. YES Securities expects annual premium equivalent (APE) growth of 18 per cent led by strength in credit protect and non-par business. It sees VNB (value of new business) margin to expand on higher share of credit protection. Motilal expects SBI Life to clock a 133 per cent rise in net profit at Rs 303.30 crore against a projection of 5.1 per cent YoY drop in Nifty50 profit at Rs 84,435 crore on a 5.2 per cent YoY drop in sales at Rs 9,03,216 crore.

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