Q2 Results Tomorrow: What to expect from Britannia, Hero MotoCorp, Sun Pharma & Tata Steel

With the earnings season on a full swing, four Nifty 50 companies are scheduled to release their second quarter results on Wednesday. These are Britannia Industries, Hero MotoCorp, Sun Pharmaceutical Industries, and Tata Steel.

Apart from these four, the other major earnings that will be tracked by Dalal Street investors are Adani Wilmar, Ambuja Cements, Godrej Consumer Products, LIC Housing Finance, REC Ltd, Indraprastha Gas, and Kansai Nerolac Paints.

Earnings Expectations:

Britannia Industries

The biscuit maker is expected to report a double-digit growth in net profit for the September quarter on the back of easing input cost pressures, but revenue growth is likely to be in low single-digits amid moderate volume growth.

Brokerage HDFC Institutional Equities has estimated a 5% YoY growth in revenue, with a volume growth of 3%. Easing input costs is likely to drive a YoY expansion of 260 basis points in gross margin to 41.5% and 115 bps in operating margin to 17.4%.

Commentary on downtrading trends, input cost trajectory, and planned new product launches will be closely eyed by investors.

Hero MotoCorp
The country’s largest two-wheeler maker is widely expected to report strong double-digit growth in net profit for the September quarter, aided by price hikes, favourable product mix and easing input cost pressures. However, revenue growth is likely to be muted due to subdued volumes.Hero MotoCorp reported a nearly 1% YoY decline in volumes for the September quarter due to continued weakness in entry level motorcycle segment demand.

Kotak Institutional Equities expects revenue to increase by 4% on year in the quarter, led by a 5% increase in the average selling price amid price increases. Operating margin is likely to improve by 50 bps sequentially, driven by gross margin expansion, price hikes, which may partly offset the increase in losses in the EV segment and higher advertisement spends.

Sun Pharmaceutical

The drug major is expected to report a double-digit growth in consolidated revenue for the September quarter, but profit growth may be muted due to weak operational performance.

The company’s arm Taro Pharmaceutical Industries reported nearly 14% YoY growth in revenue to $148 million, and posted a profit of $8.5 million, against a loss of $2.8 million a year ago.

Nuvama Institutional Equities expects US revenue to drop by 2% sequentially due to lower sales of generic Revlimid drug. While the speciality business will remain steady, domestic formulations are likely to have been subdued due to the NPPA impact, the brokerage said.

Nuvama expects overall operating margins to contract 190 bps YoY to 26%, mainly due to lower contribution from Revlimid generic drug and higher spend on research and development.

Outlook for the US business, domestic business, and regulatory updates pertaining to manufacturing plants will be closely monitored by investors.

Tata Steel
The steelmaker is expected to report a steep drop in both revenue and profit for the September quarter, due to correction in steel prices both in India and international markets. Further, subdued performance of the European business will weigh on the overall earnings.

Lower realisations and sales volumes are likely to drag down the revenue by 12% YoY and 11% sequentially, according to Axis Securities. Operating profit may decline by 10% QoQ and 22% YoY, as lower sales realization offsets the benefit from lower coking coal costs.

Operating loss in European business is expected to increase due to lower realization, lower sales volumes and higher fixed costs.

Ambuja Cements
The cement maker is likely to see a multi-fold rise in net profit for the September quarter due to a favourable base, higher volumes, and lower costs.

Kotak Institutional Equities has estimated 15% growth in volume to 8.2 million tonne, factoring in strong growth in July-August period despite seasonal headwinds. Blended realizations are seen increasing by 1.4% sequentially on account of favorable geo-mix versus peers.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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