By: Hem - 26-Sep-2019

Stocks that are expected to report high profit growth this year

The BSE Sensex and the Nifty have been hitting new highs of late. But this market rally is driven by liquidity and not earnings growth. In fact, earnings growth has not met expectations for several years now.

Will 2019–20 be any different?

Compared to previous financial years, earnings growth will be better in 2019–20. However, it will be more pronounced only in the second half of the year. We expect capital goods, banks, consumer durables and FMCG sector to report high profitability growth this year. In banks we like ICICI Bank, SBI, HDFC Bank and Kotak Mahindra bank as they are expected to post high profitability growth in capital goods, we are expecting L& T, Siemens, ABB India to post strong growth in profitability while in consumer durables and FMCG we expect stocks like Whirlpool India, HUL, Nestle India to perform well on financial front.

For the infrastructure sector, funding has remained a major worry. The expected rate reduction by the RBI could help the sector and be a growth trigger. “With reduction in growth, inflation under control, soft US interest rates, etc., conditions are ripe for a rate reduction by RBI in its June meeting,” says Kumar. “Their US generics revenue should recover during 2020–21 on the back of new launches.

Since the current earnings base has reached the bottom, the segment is expected to report better earnings growth in 2019–20,” says Jasani.

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