As a result, after a cut in profit forecast for the BSE 200 companies of around 15% since the beginning of the lockdown, the estimates have looked up by 4% since the bottom in July. Usually its been the case of starting with higher expectations of say a 20% profit growth and a constant downward revision throughout the year, ending with a flat or paltry profit growth. The result has been almost a uniform trend across manufacturing/services/industrial companies of profit margins surprising positively despite the topline pressure. In other words, what the banks have provided as credit costs for Covid related stress till now will be enough. However, amongst all the cyclical recovery in banks and industrials on margin and profit recovery, one should not lose sight of the structural factors that have lifted the profit outlook for certain sectors like IT, pharma as well as niche opportunities.

Source: Mint November 21, 2020 06:56 UTC