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What to expect from Q4 earnings?

India Inc. will start reporting earnings for the fourth quarter ended March 2021 (Q4) next week, with IT firms leading the way. Tata Consultancy Services Ltd (TCS) and Infosys Ltd will announce their Q4 numbers on 12 April and 14 April, respectively, followed by Wipro who will announce results on 15 April.

Financial bigwigs like HDFC Bank and ICICI Bank will be next in line with earnings announcement on 17 April and 24 April.

After solid Q3 numbers that exceeded expectations in the pandemic year, it is now predicted that the momentum will continue in Q4. Most analysts seem bullish on March quarter earnings across all major sectors except some like pharmaceuticals, auto and hospitality.

Here is a look at how the numbers may pan out for different sectors for the quarter ended March 2021.

IT sector

For the IT sector, the market expects a cracker of a quarter in Q4, much like it was in Q3. Investors are anticipating top-tier IT giants to report one of the best fourth-quarter earnings in the past few years. The coronavirus pandemic and the ensuing lockdown have accelerated the economy’s digital transformation agenda, thereby proving to be a game-changer for the IT industry.

As companies across sectors prioritize spending on technology, clouds, security etc, IT firms should be able to capitalize on this shift. Besides that, the positive cross-currency movement during the quarter should also support growth as a weaker rupee boosts dollar earnings for IT firms.

In the previous quarter ended December 2020, the top four IT companies -- Tata Consultancy Services, Infosys, HCL Technologies and Wipro – had reported solid revenue growth in the range of 3-5% boosted by broad-based growth across geographies and verticals.

Analysts now expect the sequential growth to be even better in Q4. However, some pressure on profit margins is likely due to hiring and people retention.


Banks are expected to post a mixed set of numbers in the fourth quarter with threat of fresh slippages looming large even as older issues of asset quality sort out. Analysts fear that slippages could be elevated in Q4 after the Supreme Court vacated an interim stay on the recognition of fresh bad loans.

However, the improvement seen in India’s economic recovery in recent quarters could also reflect in Q4 earnings of banks.

Experts say that March quarter numbers may look strong owing to low base due to lockdown in the fourth quarter of the previous fiscal year, but they might actually be flat when compared with the previous quarter.


The pharmaceutical sector may face earnings pressure in Q4 as the quarter is a seasonally weak one for most domestic names. Additionally, the US market also did not witness any meaningful launches due to lack of fresh approvals as the country battled renewed surge in Covid cases during the quarter.

However, diagnostic companies may benefit from rising Covid cases throughout the country leading to higher RT-PCR testing in the fourth quarter.

Oil and gas

Indian oil marketing companies (OMCs) are likely to report stressed earnings in Q4 due to lower margins, though upstream and gas space may report healthy earnings.

Companies like Hindustan Petroleum Corp. Ltd (HPCL), Bharat Petroleum Corp. Ltd (BPCL), Indian Oil Corp. Ltd (IOC) are likely to take a hit on profit margins as crude oil prices rose during the quarter and the hike was not transferred fully to end-customers due to state elections and economic slowdown.

However, higher crude prices should boost earnings of upstream companies like Oil and Natural Gas Corp. Ltd and Oil India Ltd during the fourth quarter. Reliance Industries Ltd’s standalone earnings should also improve given higher petrochemicals profitability.


The tourism and hospitality sector may continue to bear the brunt of the coronavirus pandemic in the fourth quarter as well, though some improvement is expected when compared with the third quarter of fiscal 2021. Hotels across the country have seen better occupancy levels in the March quarter due to pent-up demand, weddings, staycations etc. Local lockdowns and restrictions resurfacing in March have pulled back the recovery pace.


Despite auto sales witnessing a strong rebound in the previous few months, the quarterly numbers of major auto companies are likely to remain muted. Analysts expect auto firms to report a fall in profits in Q4 on the back of weak volume growth compared with a year ago and a sharp increase in input costs.

To recall, India’s leading passenger vehicle manufacturer Maruti Suzuki India Ltd recently announced that it would increase the prices of its cars from April due to the adverse impact of rising input costs. However, the industry may benefit from relatively healthier demand in the commercial vehicle and tractor segments.


The sector may also see a tough Q4, though Bharti Airtel Ltd continues to be favoured by analysts. Revenues of telecom companies are likely to take a hit during the fourth quarter due to nil interconnection usage charge (IUC) that came into effect from 1 January 2021 compared with 6 paise per minute earlier. But this should benefit Bharti Airtel as it was a net IUC payer.

Airtel has also witnessed healthy subscriber additions ahead of Reliance Jio for the second consecutive quarter, which could help its earnings.

Is there an industry you would like us to look at in the near future? Tell us in the comments and we will try to cover it soon!

Disclaimer: ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. I-Sec is a SEBI registered with SEBI as a Research Analyst vide registration no. INH000000990.The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Research related services are offered under Research Analyst license of I-Sec. Any complaint / dispute pertaining to the same would not be entertained by Stock Exchanges.

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