Top September Earning (Q2) Reports to Watch Out

As the September quarter ends, TCS along with other software firms will have steady growth rate while Tech Mahindra is expected to score better earning. Banks are expected to have weak results especially with South Indian bank’s poor Q2, 2017 results, increasing pressure on banking and telecom remains a big worry for Q2 results of other public sector banks as well. 

A Period of Lean Growth for IT Sector

TCS reported a decline in revenue by 0.2% in the June quarter while the profit declined by 10%. TCS will have its report on the table on October 12. It is expected that it will recover from the last quarter yet the revenue performance will be soft. It is expected that IT sector is likely to remain the same and the revenue performance is likely to be soft. Sequential growth is likely to get boosted by 50-150 bps due to stronger Euro/GBP and AUD. Similarly, HCL will also have a soft growing phase in this quarter.

L&T Technology Service is likely to have good times this September with a growth of 7.8% QoQ. This is because of successful deal wins recently and full-quarter contribution of Accentia. Similarly, Tech Mahindra is likely to see healthy margin expansion of 110 bps on a QoQ basis because of cost cut in last few months and almost limited increase in employee wage.

Bumper September for Oil and Gas Sector

CSL expects that this earning season oil and gas sector will have a good time because of expected growth in marketing margin. It is expected that Reliance Industries can see 2.5% QoQ rise in standalone profit. It is also expected that Oil India and ONGC are also set to gain from higher crude price.

BPCL and HPCL are also set to witness a strong result in their earnings because of favorable market. The market is set for the oil industries because successful oil deals and demands in the market.

Pharmaceutical and Telecom Sector

On the other hand, Credit Suisse has expected that this quarter will be weak for both telecom and pharmaceutical sector earning. It is expected that there will be 3-4% decline QoQ in telecom sector. Bharti Airtel and Tata Telecom has seen positive growth while Idea Cellular and Reliance Telecom sees a negative growth. Tata is also planning to shut its operations at Tata teleservices.

Banking Sector

Similar trends were observed in South Indian Bank whose profit fell by 96% in Q2’17 YoY. Private sector banks like HDFC, Kotak Mahindra and Axis Bank have gained while ICICI Bank witnessed a weak market. Problem of NPAs is the only big problem of this sector for stocks to under perform.

It is expected that businesses in other sectors may see growth in the upcoming quarters.