Sunny Agrawal, SBI Cap Securities, says earnings were a kind of mixed bag across the sectors. So, within banking again few of the banks have reported good set of number. Cement and metals, we have seen that worst of the earnings disappointment is behind us and there is a sequential improvement at least in terms of profitability for both these packs aided by again the same story that input cost is coming down and at the same time there is an uptick in realisation.
ET Now: Your first thoughts on Ashok Leyland numbers because of late we have seen that the commercial vehicle players have been doing pretty well, case in point being Tata Motors as well wherein the margins held steady for their CV segment. What is that you are pencilling in for Ashoke Leyland and your first take on the numbers, a bit of a margin improvement, but overall do you believe that the much of the positives are already in the price?
Sunny Agrawal: Yes, definitely, if you look at margin number, at least optically looking slightly better than the street estimate, but ultimately what street will look into is the growth guidance for FY26. So, we believe that maybe second half of FY26 is a time where on the low base and because of this increase in government push on capex side, we may see a very healthy recovery in terms of volumes as far as some medium and heavy commercial vehicles are concerned. And at the same time, we would like to hear commentary from Ashok Leyland on bus division. So, their EV bus division, of late, has been sitting on a very good order book, so what is the progress over there and in terms of execution. At current market price, most of the positives are already in the price and overall our estimate is that over the period of next two year the earnings growth can be to the tune of 12% to 13% cagr, so kind of a mid-teen kind of earning growth we can see as far as Ashok Leyland is concerned. Overall, broadly, it looks like in line set of numbers, slightly better than expectation at least on margin front.
ET Now: Given that we are at the fag end of the earning season, where is it that you find the positive surprises and where have been the biggest misses?
Sunny Agrawal: Yes, so coming to earning, it was a kind of mixed bag across the sectors. So, within banking again few of the banks have reported good set of number, case in point ICICI Bank, HDFC Bank, Kotak reporting in line set of number whereas the banks like Axis Bank has reported numbers slightly below the analysts expectation. Cement and metals, at least, both these sectors we have seen that worst of the earnings disappointment is behind us and there is a sequential improvement at least in terms of profitability for both these packs aided by again the same story that input cost is coming down and at the same time there is an uptick in realisation. So, both these segments, cement as well as metal, continue to report a good set of number and again, we are expecting that both this pack will continue to report a good momentum as far as earning growth is concerned during the first half FY26. Now, moving on to auto, again auto was a kind of mixed bag, so we have seen on one hand likes of Mahindra & Mahindra or for that matter Force Motors reporting a good set of number. On the other hand, within two-wheeler pack, TVS Motor has reported good set of number whereas there was a disappointment from likes of Hero MotoCorp. So, again, a mixed bag as far as auto sector is concerned. Moving on to the consumption, again within consumption we have seen a kind of tepid volume growth as far as the consumer staple businesses are concerned. But within that, Marico stood out with kind of 6% volume growth number. And on the consumer discretionary side, we have seen a decent set of number from jewellery pack, whereas value retail segment continue to report a healthy SSSG growth. QSR, we have seen a decent growth despite of coming off from a seasonally strong quarter of December, despite of that we have seen a decent quarter as far as March numbers are concerned. So, again, what I would like to sum up is that it was a kind of mixed bag as far as earning growth is concerned. So, if I try to classify between midcap, smallcap, and largecap, so we have seen a very good set of numbers from many midcap and smallcap companies and there we are finding that the growth momentum may continue for next two years. So, ultimately market is rewarding the companies which are reporting good set of number, especially from midcap and smallcap pack.
ET Now: What is your view on the metal pack because I believe that it is the second straight week where the metal counters are shining bright, though JSW Steel numbers are awaited, but within the metal pack any pocket that is looking good to you.
Sunny Agrawal: So, within metal pack, we continue to remain constructive on non-ferrous pack, so companies like Nalco has reported a solid set of earning with robust growth outlook, so we find the risk-reward to be favourable as far as Nalco is concerned among the aluminium pack. Steel pack as discussed earlier, so worst is behind the entire steel pack. So, because of this safeguard duty the NSR, net sales relations, are likely to improve going forward and with benign input cost at least the steel players will expand profitability as far as the ebitda per tonne is concerned. So, we continue to remain bullish, constructive on steel pack also. And if somebody want to ride on a stainless steel side, so we feel that one can ride that story though manganese, so we feel that kind of bottoming out as far as manganese prices are concerned. So, companies like Moil and Sandur Manganese if somebody want to take a kind of high-risk, high-return bet, so that is something which we are bullish on.
ET Now: Your first thoughts on Ashok Leyland numbers because of late we have seen that the commercial vehicle players have been doing pretty well, case in point being Tata Motors as well wherein the margins held steady for their CV segment. What is that you are pencilling in for Ashoke Leyland and your first take on the numbers, a bit of a margin improvement, but overall do you believe that the much of the positives are already in the price?
Sunny Agrawal: Yes, definitely, if you look at margin number, at least optically looking slightly better than the street estimate, but ultimately what street will look into is the growth guidance for FY26. So, we believe that maybe second half of FY26 is a time where on the low base and because of this increase in government push on capex side, we may see a very healthy recovery in terms of volumes as far as some medium and heavy commercial vehicles are concerned. And at the same time, we would like to hear commentary from Ashok Leyland on bus division. So, their EV bus division, of late, has been sitting on a very good order book, so what is the progress over there and in terms of execution. At current market price, most of the positives are already in the price and overall our estimate is that over the period of next two year the earnings growth can be to the tune of 12% to 13% cagr, so kind of a mid-teen kind of earning growth we can see as far as Ashok Leyland is concerned. Overall, broadly, it looks like in line set of numbers, slightly better than expectation at least on margin front.
ET Now: Given that we are at the fag end of the earning season, where is it that you find the positive surprises and where have been the biggest misses?
Sunny Agrawal: Yes, so coming to earning, it was a kind of mixed bag across the sectors. So, within banking again few of the banks have reported good set of number, case in point ICICI Bank, HDFC Bank, Kotak reporting in line set of number whereas the banks like Axis Bank has reported numbers slightly below the analysts expectation. Cement and metals, at least, both these sectors we have seen that worst of the earnings disappointment is behind us and there is a sequential improvement at least in terms of profitability for both these packs aided by again the same story that input cost is coming down and at the same time there is an uptick in realisation. So, both these segments, cement as well as metal, continue to report a good set of number and again, we are expecting that both this pack will continue to report a good momentum as far as earning growth is concerned during the first half FY26. Now, moving on to auto, again auto was a kind of mixed bag, so we have seen on one hand likes of Mahindra & Mahindra or for that matter Force Motors reporting a good set of number. On the other hand, within two-wheeler pack, TVS Motor has reported good set of number whereas there was a disappointment from likes of Hero MotoCorp. So, again, a mixed bag as far as auto sector is concerned. Moving on to the consumption, again within consumption we have seen a kind of tepid volume growth as far as the consumer staple businesses are concerned. But within that, Marico stood out with kind of 6% volume growth number. And on the consumer discretionary side, we have seen a decent set of number from jewellery pack, whereas value retail segment continue to report a healthy SSSG growth. QSR, we have seen a decent growth despite of coming off from a seasonally strong quarter of December, despite of that we have seen a decent quarter as far as March numbers are concerned. So, again, what I would like to sum up is that it was a kind of mixed bag as far as earning growth is concerned. So, if I try to classify between midcap, smallcap, and largecap, so we have seen a very good set of numbers from many midcap and smallcap companies and there we are finding that the growth momentum may continue for next two years. So, ultimately market is rewarding the companies which are reporting good set of number, especially from midcap and smallcap pack.
ET Now: What is your view on the metal pack because I believe that it is the second straight week where the metal counters are shining bright, though JSW Steel numbers are awaited, but within the metal pack any pocket that is looking good to you.
Sunny Agrawal: So, within metal pack, we continue to remain constructive on non-ferrous pack, so companies like Nalco has reported a solid set of earning with robust growth outlook, so we find the risk-reward to be favourable as far as Nalco is concerned among the aluminium pack. Steel pack as discussed earlier, so worst is behind the entire steel pack. So, because of this safeguard duty the NSR, net sales relations, are likely to improve going forward and with benign input cost at least the steel players will expand profitability as far as the ebitda per tonne is concerned. So, we continue to remain bullish, constructive on steel pack also. And if somebody want to ride on a stainless steel side, so we feel that one can ride that story though manganese, so we feel that kind of bottoming out as far as manganese prices are concerned. So, companies like Moil and Sandur Manganese if somebody want to take a kind of high-risk, high-return bet, so that is something which we are bullish on.
