Covid second wave may not dent FY22 earnings: Analysts
Published On: Tuesday, April 20, 2021 | By: Team KnowMyStock
Despite the sharp rise in Covid cases and the ensuing lockdown imposed in some important cities across India that can dent the economic momentum, analysts remain optimistic on the earnings trajectory of India Inc and have not yet downgraded / cut projections for fiscal 2021-22 (FY22). “Corporate earnings are yet to come back to their pre-Covid levels in realistic terms even though they may look optically higher due to the low base effect of the last year. Despite the recent lockdown measures, the companies engaged in essential services continue to run. The curbs can, at best, slow the earnings growth for a couple of months. I do not see any major impact on FY22 numbers at an aggregate level as of now,” say experts.
Regarding the economy, while Nomura has slashed India's FY22 gross domestic growth (GDP) projection to 12.6 per cent (13.5 per cent earlier) in the backdrop of rising Covid cases, those at JP Morgan, UBS and Citi now expect FY22 GDP growth to range between 10 - 12 per cent (11-13 per cent forecasted earlier).
“Overall, we expect a loss of sequential momentum in Q2-2021, but once the second wave passes (we assume July-September), it should result in a release of pent-up demand in the subsequent quarters,"say the analysts.
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