The Wrap🌯 15 Oct 2023 | New Earnings Season is Here 💰
The Wrap🌯 15 Oct 2023 | New Earnings Season is Here 💰
Your weekly digest of everything important in Indian Stock Market
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Earnings Season commences, Global Macro Indicators continue to remain choppy, IT Sector forward earnings growth guidance is lowered, Broader Market lacks direction
Click here to read about how to understand and interpret the above grid.
Real Estate was the star of this week, the CNX Realty Index beat the market and was the best performing index at 4.76% vs 1.17% for Nifty.
We highlighted Real Estate sector almost two weeks before this up move based on the data from corporate filings and followed up on it in the last week’s edition as well.
The purpose of TheWrap is to help you digest the signals away from all the tremendous noise of the everyday market and looks like its working so far :)
The IT Sector earnings are underway and so far they have been lackluster with one exception - the deal wins are close to an all time high. While the forward growth of IT sector for next two quarter is in low single digits, I (personally) believe FY25 can see resumption of growth in high teens and expanding EBITDA margins driven by all the cost optimization efforts of much of last and this year.
IT Index wise, we continue to consolidate and the valuations here seem reasonable in most areas. Most companies are also setting up for future growth by various acquisitions (more on that in the corporate filing section).
Another sector you should be paying a lot of attention to is the Asset Management Industry. Why? The trigger is the incredible pace of SIPs flowing into this sector. Consider this, in FY21 average SIP per month was ~8000cr, in just two years this figure is now double at ~16000cr per month.
Almost USD 2 Billion of domestic inflows every single month into Indian stock market!
The sector was (and still is - in my opinion) highly undervalued with the combined market cap of listed asset management companies in India roughly being USD 10 Billion in late 2022.
Opportunity invites competition and as such there is also a large list of companies foraying into this sector from brokers like Zerodha, Groww to PMS Funds like WhiteOak, CapitalMind to banks like Bandhan Bank to conglomerates like Reliance with its partnership with Blackrock.
The above chart represents the price action, if all asset management companies were a listed index. Its an interesting sector to watch out for and from this week’s price action it seems like the journey has just started. (More on this sector in the charts section of this report).
Finally, broader market continues to trade at elevated levels and consolidate. Earnings season is known to impact stock prices on both sides with swift moves - so tread carefully!
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