INSUBCONTINENT EXCLUSIVE:
A lower base might just come to the rescue of India Inc, which thinks revival in earnings is taking hold
The results season is all set to start tomorrow, with Infosys getting off the block.
Brokerage firm Kotak Securities expects a 7 per cent
year-on-year (yoy) rise in net profit from companies in its universe
Some of its peers, however, feel that not everything is fine with Corporate India.
Big names such as Infosys, RBL Bank, Gruh Finance and
ICIC Securities are lining up their numbers
So, what is looking good, bad and ugly
Edelweiss Securities sees commodities, consumer discretionary, retail lenders and NBFCs would post
over 20 per cent earnings growth during the quarter under review
The ugly will come from lenders with corporate focus and telecom, which may report losses in Q4 FY18.
Nifty companies are likely to post top
line, Ebitda and net profit growth of 14 per cent, 23 per cent and 15 per cent yoy, respectively, implying 7 per cent FY18 EPS growth, said
Edelweiss.
Let's see what key sectors have on offer insofar as the fourth quarter goes.
Energy: Kotak Securities believes that quarterly
numbers are expected to be robust for upstream PSUs, given higher global crude prices and dividend receipts
Sequentially, it will be weak for oil marketing companies (OMCs) in general due to sharply lower adventitious gains and adverse forex
Q4 top line to jump around 11 per cent YoY driven by 10 per cent growth in hospitals and 17 per cent growth in diagnostics, according to
Performance in the hospital space is likely to be led by Apollo Hospitals, with its Ebitda expected to go up by a strong 28 per cent
However, overall Ebitda for hospitals is expected to be dragged down by Max India (Max) due to regulatory issues and Fortis Healthcare
(Fortis), which is in the midst of a reshuffle
Financials: Market mavens see weak numbers coming in from banks due to elevated credit costs, weak NII growth and lower treasury gains
Brokerage houses also see high slippages due to recent RBI guidelines on stress recognition and resolution
Aviation: Elara Capital expects aviation firms including InterGlobe Aviation (IndiGo), SpiceJet and Jet Airways to report 14 per cent yoy
fall in their cumulative PAT due to anticipated flat yields of IndiGo and 13 per cent annual increase in unit fuel cost to Rs 1.4 per
maintain their growth momentum, largely on the back of new launches, signs of rural recovery, price reductions post GST, rate cut across
exhibition: Nirmal Bang Securities expects a growth in revenues for PVR and Inox Leisure on an annual basis
This is largely because of new screen addition, increase in ticket prices, FB and advertisement prices
The improvement in margins is expected to be led by input tax credit (ITC) on non-FB items
Technology: Motilal Oswal Financial Services expects aggregate revenue growth of 3.5 per cent qoq (quarter on quarter) for tier-2 IT
companies in dollar terms, 60 bps higher than tier-1
While cross-currency movements will rub off positively across the board, the rupee, a key determinant of margins, has not moved
The brokerage firm expects Infosys to start the year by guiding for 6-8 per cent growth in constant currency (which will be higher in
volumes are expected to impart operating leverage benefits, focus will continue to remain on elevated commodity cost pressure
Edelweiss believes that Tata Motors is likely to report the strongest margin expansion of 130 bps qoq as Q4 is a seasonally strong quarter
Metals: Gains from higher realisations is likely to be partially offset by increases in coking coal and iron-ore costs
Kotak Securities estimate Ebitda/tonne for domestic steel companies to increase by 11-27 per cent qoq
Real Estate: Low credit availability has led to small developers holding back launches or partnering with select developers
We expect debt to increase for Prestige (on account of acquisitions, consolidation and PE payoffs), DLF, Oberoi Realty and Brigade
termination rate (ITR) cut effective February 1, 2018, and continued ARPU downtrading are likely to reflect in another quarter of sharp
sequential revenue decline for the incumbents
