4QFY10 Results Preview – Commodities + Autos to Lead

As we move into the results season of Q4 FY 2010, here is what analysts have built their expectations from the street. Expect Sensex companies to post a strong headline net profit growth of 45.3% (including consolidation) and 30% excluding consolidation. However, earnings are skewed by the strong performance of commodity stocks which account for over 60% of the growth. Surprises could come from forex gains, given the sharp rupee appreciation this quarter.

Margins across most sectors show recovery rising by an estimated 568 bps. This is largely led by commodities, real estate and autos. However, Telecom and Industrial show margins decline.

Metals, Autos and Real Estate lead the earnings growth. Telecom, R&M companies and IT to do poorly. Commodities and Autos were the key contributors to the earnings while telecom drags Sensex earnings. Tata Steel, RIL, Sterlite & Hindalco and Autos Tata Motors & Maruti Suzuki are expected to contribute significantly to Sensex profit growth.

We expect Sensex companies to clock a sales growth of 17% for the quarter driven by the low base of the previous year. According to Merrill, here are the sector-wise likely OUTPERFORMERS.

  • Automobile – Tata Motors
  • Banks – SBI, ICICI Bk
  • Consumers – Asian Paints, ITC, Pantaloon Retail
  • Cements – Ambuja
  • Health-care – Lupin, Biocon, Cadila
  • Metals – Nalco, Tata Steel
  • Real Estate – DLF
  • Software – TCS

Stay tuned as results pour in over the next 4 weeks. SEBI has mandated all Listed Companies to submit their audited results within 45 days of the closure of the quarter. Good Move.