Chola Securities' Dharmesh Kant On Markets As Earnings Kickoff: 'This Market Is Discounting That Nothing Can Go Wrong'

After a robust financial year, the Indian markets would start FY25 kicking off the earnings season. With the initial results coming in, the markets have seen some sharp movements and the upcoming weeks could see a lot more of that.

So we sat down with Chola Securities' head of equity research Dharmesh Kant to understand what one can expect from the March quarter earnings and how the market could react to it.

Q4 Overview

“I think it would be anywhere around 17% to 20% kind of earnings growth. And going by the business update that has come out across the board, things are looking quite robust,” said Kant.

He adds that his target Nifty EPS (earnings per share) target for FY24 should also be met as the Q4 numbers come in. “My Nifty EPS target of around 1,020, 1,050 for FY24 is likely to be met when this quarter’s earnings are rolled out because the latest swing in the input prices will not be reflected in any of the companies because there’s a time lag. So Q1 of FY 25 would be a difficult one. But Q4 FY24, I think we will pass through with flying colours,” Kant told Benzinga India.

The Winners

Sharing his views on which sectors could bring happiness to investors this quarter, Kant said that BFSI, Auto, Realty, Metals, and Banks are some sectors to watch out for.


“If you look at the BFSI segment, in their business update, they reported in excess of 20% kind of an AUM growth along with the deposit base also increasing hand in hand. So there is not much of a slippage out there. The same has been the case with private sector banks where you know, growth has been in excess of high teens, 17%-18% kind of a growth. And similarly, deposit growth has also gone in the same direction,” said Kant. For the public sector banks, he said that the growth has been in the early teens again, as has been in the case of late.


Talking about the sector, Kant said that it could be mixed as some companies have shown good volumes while others have had a quieter quarter.

“In Q4 TVS, Bajaj Auto did well because of the exposure to the other side of the world and the exports were the ones which picked up that was the reason why they were able to deliver more than 20% kind of quarterly growth on the volume sales. At the same time, if you look at companies like Hero MotoCorp, it was struggling. It was a high single-digit kind of growth on the volumes and this shows that the entry-level segment is still struggling.”

Talking about the four-wheeler segment Kant mentioned that Maruti and Tata Motors have both done good numbers. Talking about what to expect from the companies in the new financial year, he said, “I think volumes will still be there for like Maruti and all. But what will happen for these companies is the margins will come under pressure. The first half auto companies will sail through, be it two-wheeler or four-wheeler on the passenger vehicle side. But the second half would be challenging.”

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Another segment that Kant expects to do well this earnings season is Metals. “Volume growth has been there, be it steel manufacturers or the iron ore producers, even coal mining that has done pretty well. If you look at Hindalco, copper, aluminium, and zinc, every segment has been doing well. Silver has seen a very good volume growth. So these companies will come out with a decent set of numbers. But I think we’ll see better numbers play out in Q1 FY25,” said Kant.

Real Estate

“Real estate companies are seeing good traction. Most of these companies are likely to come out with a stellar set of numbers for this quarter. We have seen the business update, be it Macrotech Developers, Godrej Properties and all. And this is a cyclical business. I mean, the quarter in which the new launches are there, bookings are there, they book their revenues very fast, but this quarter will be great. So to sum it up, I’m expecting around 15% to 20%, kind of earnings growth,” said Kant.

The Trouble Areas

Moving on from sectors that have bright earnings ahead, we asked Kant about what sectors he thinks might find it difficult this earnings season.

Information Technology

The IT sector has remained subdued for quite some time now. So we asked Kant, whether there is some hope of things changing soon.

“IT is another segment that would be watched very closely. Last time most of the companies either maintained their guidance or trimmed their guidance in a much narrower band. This time the management guidance and commentary would be a litmus test on the prices of the stocks because the last one and a half months have seen a recent stock price correction in the IT companies and if this time around they are able to maintain their guidance or up their guidance even marginally, things will pick up,” Kant remarked.

Talking about the market leader in the segment TCS, Kant said that he does not expect any big surprises. “I don’t think any blockbuster earnings growth is going to come out. The only thing is, if it’s not poorer than what it was last quarter, it will suffice.”


Another segment that has been in a bit of a lull has been the fast-moving consumer goods sector. Talking about whether that could change this earnings season Kant said, “FMCG has seen a slight uptick in volume going by the numbers reported by say Marico or Adani Wilmar and all. So better than Q3. Q3 was not so good for the FMCG segment. I’m expecting around say mid-single-digit kind of a volume growth from low-single-digit last time around and margins to be stable.


Talking about the chemicals sectors, Kant said that while the stocks have seen some run-up, fundamentally things have not changed as much. He adds that the companies could see a turnaround starting Q1FY25.

“Q1FY25 does look promising for chemical segment because if you look at the manufacturing activity in most of the developed geographies, they are now showing signs of improvement. US just moved into an expansionary mode on the manufacturing side. China is coming up slowly. Germany saw 2.1% kind of a manufacturing growth playing out. So, I think if Europe picks up then I believe that again chemicals will come into swing because most of the chemical companies have their intermediaries or intermediate products being sold majorly to European countries where there was a slowdown,” Kant added.

The Results After The Results

Just as the earnings season would wrap up, the country will wait for another major result to come out, the Lok Sabha elections. So we asked Kant, how he sees the markets performing in the run-up to the election results and what could one expect post results.

“If you look at the texture of the market, this market is discounting that nothing can go wrong. So that is the only worry for this market. As far as the elections are concerned. I think that’s already done and dusted. The results are something that everyone knows in their mind and so the market has fully discounted that.”

Talking about interest rates, another major factor that could provide impetus to market, Kant said that he does not see any rate cuts anytime soon. “The talk is about cutting of interest rate but I think there can be a situation when you are looking at further hiking of interest rate to just to control commodity inflation has picked up.”

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