Analysts slash FY22 profit estimates; telecom, PSU banking firms suffer

The corporate landscape has undergone a sea change due to Covid-19. And, so have analysts’ expectation from companies operating in various sector.
 

An analysis done by Motilal Oswal Financial Services (MOFSL) shows, health care and technology are the only two sectors which have seen an upgrade in FY22 earnings. While the telecom, state-owned banking, and retail sectors have seen the biggest downgrades.

 

At the start of the year analysts were expecting the PSU banking pack to post a combined net profit of Rs 573 crore in FY22. Now they expect them to clock earnings of just Rs 334 crore.
 

Among Nifty stocks, Dr Reddy’s, Cipla, and Hindalco have seenthe biggest upward revision in FY22 earnings estimate. IndusInd Bank, Tata Steel, and Axis Bank have seen the sharpest cut. Analysts say firms that have seen a sharp earnings cut will struggle to regain pre-Covid levels.

 

“At 18.3x estimated FY22 earnings, we believe the market is trading closer to its long-period averages and building in fair amount of earnings recovery in FY22,” said Gautam Duggad, head of research-institutional equities at MOFSL.