Another quarter of polarised result expectations

Select auto, consumer durables, oil marketing and agri companies estimated to do well; software, banking and oil producers to lag

The composition of an investor's equity portfolio has never been more important on Dalal Street. There have been either strong performing sectors or laggards so far, and the September 2016 quarter is unlikely to be any different; at least, that's what the earnings estimates suggest.

Given the brokerages' estimates for the September quarter, four out of every 10 companies (126 companies out of 299) are likely to cheer investors with 15 per cent or higher growth in net profit on a year-on-year basis.

At the other extreme, nearly a third of the companies (109 firms) are expected to report either a decline in their net profit or an increase in net loss, compared to the year-ago quarter. (Click here for details)

Around a fifth of the companies (55 firms in all) are expected to report a year-on-year growth of anywhere between zero and 15 per cent in earnings for the September 2016 quarter.

Another nine companies are expected to report a turnaround - from a net loss in the year-ago period to a profit, while one company is expected to slip into the red, for the just-concluded quarter. Notably, a fiscal stimulus by the central government and low commodity prices have created these sets of winners and losers in corporate India even as the overall numbers look static.

While the big picture or secular trend is not encouraging, the big winners for the September quarter are likely to be auto makers, especially two-wheeler makers and their vendors, followed by consumer durables companies. Premium motorcycle maker Eicher Motors is likely to top the charts among large-cap companies with 70 per cent year-on-year growth in net profit and 36 per cent year-on-year growth in net sales for the quarter.

In the consumer durables space, Havells India is expected to be an outperformer with nearly 30 per cent growth in net profit on a 14 per cent increase in net sales, compared to the year-ago quarter. Air conditioner and capital goods maker Voltas could also surprise positively with a 40 per cent year-on-year jump in net profit, despite a sluggish four per cent increase in net sales.

Analysts are also betting on high double-digit earnings growth from pesticides and agrochemicals manufacturers such as UPL, Rallis India, Bayer CropScience and PI Industries on the back of a good monsoon and low crude oil prices translating into lower raw material cost.

Benign crude oil and natural gas prices in the quarter are likely to create winners out of public sector energy companies such as Indian Oil, Bharat Petroleum, Hindustan Petroleum, GAIL (India) and Petronet LNG, among others. But, this is also likely to suppress the top line and bottom line growth of upstream energy producers.

The biggest disappointment will come from information technology services' exporters such as Tata Consultancy Services, Infosys, HCL Technologies and Tech Mahindra, which may report flattish revenue and profit growth due to global economic headwinds. Likewise, public sector banks are likely to disappoint in the September quarter.