'Consumer cos expected to reach pre-Covid sales levels in Q4FY21'. Image Source: IANS News

New Delhi, April 10 : Cyclicals stocks are expected to drive 4QFY21 earnings even as rising Covid-19 cases has potential to emerge as a headwind, MOFSL said.

"We expect another strong quarter, aided by a deflated base of 4QFY20 and healthy demand recovery for the large part of 4QFY21 - as attested by high-frequency indicators," said Motilal Oswal Financial Services Ltd in a report.

"Performance is expected to be healthy despite headwinds of commodity cost inflation in various sectors." The key drivers of the 4QFY21 performance, said the report will be metals, private banks and NBFCs, IT, Autos and Consumer Staples and Durables.

"MOFSL and the Nifty are expected to post a healthy two-year profit CAGR of 16 per cent and 14 per cent respectively, over 4QFY19-4QFY21." Besides, it said that fiscal FY21 is expected to end with healthy 13 per cent EPS growth for the Nifty, the highest in the last six years.

"In 4QFY21, high-frequency data points such as GST collections, electricity consumption, auto sales, UPI transactions and railway freight point to an increase in economic activity." However, the report said that recent uptick in Covid cases is unlikely to impact Q4FY21 results, even as it presents risks for FY22 earnings delivery.

"A prolonged pandemic spread and an increase in restrictions may curb economic activity in FY22, which may further defer revival in FY22."

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