Local lockdowns and restrictions being put in place to control the Covid infection could cause a huge setback to corporate companies’ earnings. Analysts have started reducing the earnings estimates of these companies. During the last four weeks, it has been estimated to decrease the earnings per share of 80 companies included in the NSE 500. The possibility of a decrease in earnings of companies has increased due to the downgrading of auto, pharma, and banking shares. However, analysts believe that if the situation in Covid improves, then the situation can be normalized very fast. But at the moment, there is not much hope for it.
As Covid case increases, companies on the earnings front deteriorate
The earnings per share of Bharti Airtel, Titan, Tata Motors, Hindustan Unilever, Indian Oil, ONGC, Dr. Reddy’s Lab, Bajaj Finance, and Ultra Tech Cement which have been included in the Nifty 50 have declined during the last four weeks. Motilal Oswal Financial Services Chairman Raamdeo Agrawal said that with the growth of the Covid case, the position of companies on the earning front is deteriorating very fast.
Much depends on the speed of the vaccine
Some of the companies out of the Nifty 50 that are expected to fall in earnings include UPL, PI Industries, United Spirits, Jubilant Foodworks, Hindustan Petroleum Corporation, Container Corporation of India, Bharat Electronics, L&T Technology Services, and Glaxosmithkline Farms. . However, Gopal Agarwal of HDFC Mutual Fund says that if the pace of vaccination is fast, then there may be good results on the earnings front. At present, the emphasis is on intensifying the supply of Covid vaccine in the country. The government can also ask for vaccines from some other countries. At the same time, emphasis is also on domestic production.