20 companies worth watching this earning season

The biggest losers could be from retail space due to concerns over consumer sentiments impacting footfalls and same store sales

Before the earnings season starts, it will be worth to keep a watch on some of the companies, which are expected to do worst and best in terms of profit growth during the quarter ended September 2012. The biggest losers could be from the retail space due to concerns over consumer sentiments impacting footfalls and same store sales. Pantaloon Retail is top on the list with 94 per cent expected decline in net profits during the quarter ended September 2012. Despite 11 per cent growth in operating profits, Pantaloon is going to take hit as a result of higher interest cost, which is expected to consume almost two third of the company's operating profits during the quarter. Within retail space the Shopper's stop too is expected to report decline in profits by 82 per cent. The company could take a hit on account of higher overheads on new store openings and extended discount period along with the higher interest out go which is expected to impact the profit margins.

The next candidate is from the metal space Tata Steel, which is expected show its adjusted consolidated profits to decline by 63 per cent. This is partly attributed to the decline in the domestic steel prices and negative contribution at the operating profit levels from other subsidiaries like Tata Steel Europe due to the decline in realisations led by lower steel prices and sales in the Europe. Average steel prices are lower by 4 per cent in Europe on a quarter on quarter basis and steel shipments is expected to decline 16 per cent on year on year basis. The list also includes leading telecom company Rcom, which could report 60 per cent decline in the profits. However this is largely attributed to the net finance cost, which is to more than double to Rs 531.6 crore in the September quarter as against the Rs 227.4 crore in the year ago quarter.

In the automobile space Maruti Suzuki could be worth keeping an eye, which is expected to report 8.7 per cent decline in the volumes. However the 16.4 per cent expected improvement in the margins should reduce the impact. Despite that, it could report 51 per cent decline in profits as a result of expected 160 basis point decline in operating margins, which is to do with weak petrol car demand and consequent discounts along with the impact of unfavourable currency movement and recent wage hike. 

	Positive		Negative
Company	PAT growth (%)	Company	PAT grwoth (%)
MRPL	3365	Pantaloon	-94
Chennai Petroleum	305	Shpper's Stop	-82
Cairn India	271	Tata Steel	-63
Strides Arcolab	190	Rcom	-60
ABB	145	Maruti Suzuki	-51
Sesa Goa	139	Reliance Infra	-48
United Phos.	120	Unitech	-47
Cadila	110	BGR Energy	-42
ACC	103	Tulip Telecom	-37
Oriental Bank	98	DLF	-37
Source: Motilal Oswal Securities (MOSL)
Note: The list of the companies are based on companies that are covered by MOSL

The gainers

Not just the underperformers there are top ten companies which going to surprise on the upside. On an average these top ten companies (mentioned in the table) on an average are expected to report earnings growth of 485 per cent including the strong expected performance of MRPL, which is expected to 3365 per cent growth in profits. The strong profit growth could be led by higher throughput and higher gross refining margins due to crude inventory gains.

Even if we exclude the profit growth expected to be reported by MRPL the rest of the pack is expected to report a year on year 165 percent growth in profits during the second quarter ended September 2012. More importantly the next two companies too in the ranking are from the oil and gas sector namely Chennai Petroleum and Cairn India. In the case of Chennai Petroleum, the operational gains are expected to add to the bottom line considering that the company is expected to turn into profits at the operating levels compared to operating loss of Rs 210.2 crore in the second quarter last year. Cairn India is expected to witness the benefits of higher production at Rajasthan, leading to expected 84 per cent growth in revenues in the second quarter of the current financial year. That apart the operational gains and lower interest outgo is expected to lead the Cairn India's profit to grow at whopping 271 per cent in the September quarter.