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MOSL: MOrning India (2/August/22): 1. Strategy (Interim earnings review – 1QFY23: Below expectations); 2. ITC; 3. Varun Beverages; 4. Cholaman.Inv.& Fn; 5. UPL; 6. Ashok Leyland

MOrning India (2/August/22): 1. Strategy (Interim earnings review – 1QFY23: Below expectations); 2. ITC; 3. Varun Beverages; 4. Cholaman.Inv.& Fn; 5. UPL; 6. Ashok Leyland

Today’s top research theme

Strategy: Interim earnings review – 1QFY23: Below expectations

• As of 31st Jul'22, 110/31 companies within the MOFSL Universe/Nifty have announced their results. The earnings growth in 1QFY23 has been subdued and led solely by BFSI. However, the spread of earnings has been decent with 68% of our universe either meeting or exceeding profit expectations.
• As the benefit of the recent moderation in commodity costs start accruing in 2HFY23E, we expect other sectors to contribute too. Markets have bounced back smartly in Jul'22 with Nifty-50 rising 9% MoM and almost wiping out the entire YTD'CY22 decline.
• With this rally, Nifty now trades at 20x FY23E, comfortably above the LPA and offers limited upside in the near term, in our view. We reckon the upside from here will be a function of stability in global and local macros and continued earnings delivery v/s expectations.
• In our model portfolio, we maintain our OW stance on BFSI, IT, Consumer and Auto.

• Piping hot news

  Passenger vehicles witness record sales in July

  India’s passenger vehicle manufacturers reported record sales in the local market last month, amid easing of component supply challenges that had disrupted production in the past year and a half. As many as 342,300 passenger vehicles were sold in July, as per industry estimates, an increase of 16% from a year earlier when manufacturers dispatched 295,000 units to dealerships. Prior to this, passenger vehicles sales had peaked at 334,000 units in October 2020.