HDFC Securities prefers economy-facing & value stocks after Q1 FY 24 earnings.
HDFC securities said
In The HSIE coverage universe, projected earnings growth for FY24 and FY25 stands at 23.4% and 12.0% respectively, factoring in sustained margin recovery and demand momentum, but excluding the energy sector which is subdued due to petrol freeze & tax implications.
Justification
Highlights of HDFC Securities earnings view report for Q1 FY24
98% incremental Y-o-Y earnings growth attributed to only three sectors namely auto, energy & lending financials.
Key changes in its model portfolio, which are as follows -
Inclusion/weight increase - BSE, Star Health, CDSL, Hindalco, etc.
Exclusion/weight reduction - ICICI Securities, DLF, Torrent pharma, etc.
Large-cap stocks experienced significant earnings growth of 55% Y-o-Y, whereas midcap grew by 24% Y-o-Y basis.
Out of the company’s coverage sectors such as auto, cement, pharma, financial lending saw significant Y-o-Y revenue growth followed by low growth in sectors such as staples, real estate & metals.
On an average, the companies' profits in the coverage universe were 6.6% higher than the estimates led by the auto, energy, and metals sectors, but IT, home improvement & energy missed the target.
Earnings estimates that were deeply concentrated to certain sectors include
Upward revisions by sectors such as Auto, Lending financials & energy by 18%, 46% & 13% respectively.
Downward revision by sectors such as IT, Chemicals & Metals by 46%,19% & 24% respectively.
