Q4 Earnings Preview: Net profit of these 5 stocks is likely to fall by up to 63% in March quarter

Divi's Labs: The brokerage expects the stock to report a 62.8% YoY decline in its net profit at ₹312 crore in the March quarter. Its net sales are also likely to fall 30% YoY to ₹1,766 crore in Q4FY23 dragged by the custom synthesis segment, said MOSL. However, the EBIT margin is likely to improve to 25.2% in Q4 from 23.9% in Q3. It further noted that the operating margin of the firm will gradually improve QoQ on the back of easing cost pressures. Progress on new molecule addition in generic API space, an update on Iodine based custom synthesis projects and the scope of work on peptide-based custom synthesis business will be key monitorable. 

Hindalco: MOSL sees the Q4 profit after tax (PAT) of the firm falling 43.7% YoY to ₹2,300 crore. Its net sales are also estimated to fall 4% YoY to ₹53,500 crore, forecasted MOSL. The brokerage noted that Novelis sales volumes are expected to be 975 kt. Also, the contribution from the auto sector is expected to improve to over 20%, it added. The timeline for the commissioning of greenfield facilities in the USA is important and management guidance on domestic Aluminum demand are key things to watch out for, said the brokerage.

JSW Steel: The steel firm is expected to post a 26.7% YoY decline in its Q4 net profit, said MOSL. Meanwhile, its sales are seen falling 3% YoY to ₹45,500 crore. However, on a QoQ basis, the results are likely to witness strong improvement. Its consolidated sales volume is likely to rise to 6.3 mt (up 10.9% QoQ and 23.5% YoY). Revenue/EBITDA are also expected to improve by 16%/58% QoQ, while Adjusted PAT is expected to rise 4.9x QoQ, forecasted the brokerage. The performance of overseas subsidiaries and the movement of coking coal costs will be crucial, it noted adding that the management commentaries on FY24 production and sales, as well as production ramp-up at captive iron ore mines, are important monitorable.

Tech Mahindra: Net profit of the IT firm is seen declining 13.3% YoY to ₹1,300 crore in the March quarter. Meanwhile, its sales are likely to jump 13.6%, to ₹13,800 crore in Q4. Dollar revenue, however, is expected to remain muted, up just 0.3% at $1.6 bn in Q4. EBIT margin is estimated to decline in Q4 due to a lack of operating leverage in the March quarter at 15.5%, from 15.6% in the December quarter. Extended furloughs, broad-based softness and persistent headwinds in the telecom client will result in a 0.7% CC revenue decline in Q4FY23, said MOSL. It expects deal wins to remain soft in the $500-700 mn quarterly band. Hiring may remain muted, it added. The outlook on margin and growth in the telecom vertical will be the key monitorable.

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