IGI Logo

For YES Sec universe (Ex Financials & OMC):

Topline growth is seen at 8.8% y/y, reflecting a slight pick-up compared to the previous two quarters. This can be attributed to a rebound in economic activity. EBITDA margins are likely to expand by 186bps y/y basis, touching 19.4%, the best seen in the past 7 quarters, however sequentially the number is growing by a mere 4bps. PAT growth of 27% y/y basis is the strongest seen in the last 8 quarters 

* Topline growth of 8.8%y/y for our coverage universe is a positive takeaway as it snaps the falling revenue growth trend observed over the last seven quarters. The revenue growth for Q3 will be primarily driven by Consumption and infra-based sectors like Consumer Durables, Auto, Cement, and Capital Goods.

* Q3 margins are likely to witness an improvement of 186bps y/y to 19.4%, marking the second consecutive quarter of y/y expansion. However, on a sequential basis, the expansion rate has tapered to a mere 4bps, indicating the best is behind us. Consumption and Infra sectors which witnessed a strong uptick in topline, are also witnessing strong rebound in operational margins. For global-facing sectors, Pharma is likely to witness decent margin expansion while IT is likely to report a 36bps contraction.

* Topline growth along with improving operational efficiency drives PAT growth of 27% y/y, the best traction seen in the last eight quarters. In the current quarter, Metal companies are likely to turn black (Q2 FY24 reported losses on an aggregate basis). On the negative side, margin erosion in IT is likely to impact aggregate profitability.

For Financials: Softening NIM margin to offset a steady uptick in credit growth, NII to expand 13% y/y 

*  NII for Banks is expected to register a 10% y/y rise, as steady credit demand offsets NIM contraction. Wage revision in SBI will impact the aggregate PPoP, which may witness a de-growth of 7%y/y, the 1st contraction in the last 7 quarters. This will impact PAT, which is likely to grow by a mere 1% y/y, the worst growth post-June 2020.

*  While NBFC and SFBs will continue to witness a strong performance, with NII/Revenue and PAT growing at 22.7% & 24.4% y/y respectively.

Oil & Gas and OMCs: These are the only two sectors to witness a revenue downtick y/y basis and that too because of lower oil pricing hurting realization for upstream companies, while resulting in inventory loss for OMCs

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632