India’s sweltering heat and drawn-out election season could produce some unexpected winners and losers this quarter as consumer companies such as Bajaj Auto Inc. report earnings this week. Conglomerate Reliance Industries Ltd.’s retail business will also be in the spotlight when it reports results on Friday.
Demand from villages and small towns outpaced cities in the April-June quarter, a sign of broader economic growth in India. Avenue Supermarts, a supermarket operator with a wide presence in small Indian towns, reported a 17 percent rise in first-quarter profit on Saturday, just missing profit expectations. Motorcycle maker Bajaj Auto’s monthly sales report showed the unusual weather reduced enquiries from potential customers and delayed buying decisions. Both companies stand to benefit from forecasts of an above-normal monsoon.
Finance Minister Nirmala Sitharaman, when she presents the union budget on July 23, is widely expected to propose measures to stimulate consumption and provide further stimulus to consumer-facing businesses and retailers that have been hit by sluggish rural spending in the past few quarters.
Meanwhile, Taiwan Semiconductor Manufacturing Co. (TSMC) is expected to post its strongest quarterly profit growth since the end of 2022. Its June sales also beat expectations amid rising demand for AI infrastructure. Optimism about the company’s performance helped its Taipei-listed shares surpass NT$1,000 earlier this month, giving it a market capitalization that briefly topped $1 trillion.
The AI boom should also spur demand for services offered by Indian IT exporters Infosys and Wipro Inc. Industry leader Tata Consultancy Services on Thursday reported profits that met analysts’ expectations, suggesting that companies are gradually restarting spending on projects.
Notable highlights:
Tuesday: Bajaj Auto Corp. may post its slowest profit growth in five quarters as a heatwave across much of India slowed auto sales growth. The Federation of Automobile Dealers Association of India said the weather and the elections have reduced showroom traffic and delayed purchases. The company launched a new CNG-powered motorcycle earlier this month, which could help it gain more share in that product segment, Jefferies said.
Wednesday: Asian Paints (APNT IN) is expected to post a 9.2% decline in first-quarter net profit, according to consensus estimates. Price cuts and weak product mix slowed revenue growth, according to Jefferies. Gross margin growth is also expected to be partially offset by higher expenses and negative operating leverage, according to Kotak Institutional Equities.
Thursday: TSMC (2330 TT) is estimated to post a 29% increase in second-quarter net profit. Several brokerages, including Morgan Stanley, have raised their target prices for the chipmaker as companies race to secure hardware to build AI-assisted infrastructure. The main highlight of the company’s upcoming earnings report will be how much TSMC can negotiate price increases given robust product demand.
-
Infosys Inc.’s (INFO IN) first-quarter net profit is likely to be buoyed by revenue growth across all segments, despite a slight decline in financial services revenue. Emerging technologies account for more than 60% of the company’s total sales, but the Indian IT company’s near-term growth is likely to remain weighed down by weak corporate IT spending, Bloomberg Intelligence said.
Friday: Reliance Industries (RELIANCE IN) may see quarterly profit pressured by weaker demand for petroleum and chemicals due to lower diesel prices, according to BI. Retail sales growth slowed to 6% in the quarter due to slower store count growth. Telecom will benefit in coming quarters from tariff hikes taking effect from July. Consensus is for quarterly net profit growth of 13%.
-
Wipro’s (WPRO IN) first quarter earnings may decline at constant exchange rates, but margins are expected to expand, as expected. Nomura analysts expect EBIT margins to expand due to ongoing cost management programs and improved Capco utilization. Recent strategic alliances with other companies such as Siemens for automotive software should support the company’s earnings in the long term.
Published July 15, 2024 10:27 IST
