The corporate earnings growth in FY22 looks strong for almost all sectors while 2-year CAGR in Nifty would be at 15-16 percent, said Gautam Duggad, Head of Research, Institutional Equities at Motilal Oswal Financial Services.
Duggad expects 94 percent YoY earnings growth for Nifty.
“FY21 saw the best earnings growth in the last 10 years. Almost all the sectors are expected to do well this quarter given the lower base. We are expecting 100 percent-plus growth for our broader coverage universe and for Nifty we are expecting 94 percent earnings growth. The 2-year compound annual growth rate in Nifty would be at 15-16 percent,” Duggad said in an interview with CNBC-TV18.
Duggad expects metals to account for more than 25 percent of incremental earnings for Nifty in FY22. On the banking, financial services and insurance (BFSI) sector, the brokerage house expects profits to grow from $1.2 trillion to almost $2 trillion by FY23.
However, according to him, the auto sector continues to look vulnerable and expect 400 bps of a dip in EBITDA margins QoQ for auto companies.
Motilal Oswal sees a big cut in FY22 estimates for Tata Motors after the company flagged concerns over the chip supply shortage. On Tuesday, the company said that it expects the wholesale volumes of its luxury car brand Jaguar & Land Rover (JLR) to decline about 50 percent in the September quarter of FY22.
Meanwhile, the brokerage house does not see much downward revision in Nifty EPS estimates despite the second COVID wave.
Around 43 per cent of small caps are trading below January 2018 levels, he said.
For the entire interview, watch the video