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Dam Capital expects strong growth from the banking and auto sectors in the second quarter of 2023.


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Mumbai: In its recent Q2FY23 Earnings Preview Notes, DAM Capital talks about how it expects strong growth from the banking and auto sectors. We expect overall margins to improve slightly on the back of easing cost pressures and price pass-through. They also said the outlook for demand conditions and capital spending outlook will be key aspects in the second quarter of 2023, but expect sales growth to remain high over the same period.
According to DAM Capital’s universe excluding banks, net sales growth is expected to grow at a similar pace of 21% year-over-year in Q2 FY23 compared to 22% in Q1 FY23.sectors such as automotive, chemical, hotels, retail, infrastructure, and logistics are expected to show high growth. On his 3-year CAGR basis outside of media, he expects all other sectors to outperform pre-corona levels. They went on to say that continued momentum in domestic demand in retail, hotels and strong demand in the automotive sector will drive higher earnings.

In terms of EBITDA and PAT, DAM Capital believes the non-banking sector is likely to report EBITDA growth of 11% YoY and 9% CAGR compared to pre-corona levels. increase. They expect the EBITDA margin to expand by 50bps on a QoQ basis. This is on the back of lower commodity prices, continued improvement in demand and some easing of cost pressures from operating leverage in specialty chemicals. The automotive, hotel, retail, specialty chemicals and logistics sectors have shown improvement in his EBITDA from the first quarter itself. It also expects PAT to grow by 14% year-on-year, largely driven by the automotive, banking and power sectors.

Regarding the bank’s performance in the second quarter of 2023, the bank expects continued earnings momentum driven by loan growth, NIM expansion and lower credit costs. As banks focus on building franchises, sourcing their business, and improving their digital capabilities, we expect operational costs to continue to be a key factor hindering pre-provisioned operating profit (PPoP) growth. For DAM Capital’s coverage universe, NII expects 14.2% year-over-year and 5.2% quarter-on-quarter growth, driven by 19.9% ​​year-over-year and 3.4% quarter-on-quarter loan growth. With yields expected to be lower than QoQ and financial gains expected to be modest, PPOP QoQ could grow 15% more. They also expect NIM to expand by an average of 13bps year-on-year and 5bps quarter-on-quarter, but strategies related to deposit growth will be watched closely.

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