September has been a strong quarter, beating expectations across most sectors, led by margin surprises and in-line revenue performance. The net profit of Nifty50 companies increased by double digits compared to muted expectations and revenues rebounded at a faster pace than costs after the lockdown, resulting in robust earnings.
Sanjeev Prasad, MD & Co-Head of Kotak Institutional Equities is starting to see an earnings upgrade cycle.
“The economy has been a lot more resilient. Companies have managed to rejig their supply chains and even get back on track of production really quickly. So, all that means is that we are starting to see an earnings upgrade cycle,” he said in an interview to CNBC-TV18.
Prasad expects to see an earnings upgrade in banks if provisions remain at current levels. “As of now it looks like whatever provisions the banks have made seem to adequately reflect the eventual amount of NPAs and credit cost. So, if that is the case, we could probably see one digit upgrades coming in."Watch video for more