The earnings season
for the third quarter of
FY 2017-18 is under
way.
For the first time in 12
months, experts are
upbeat about this
quarter’s performance.
The reasons are:
#11) Low earnings base
A low base in FY2016-17
is one of the major
reasons.
Demonetisation in
November 2016 had a big
impact on consumption.
As a result, sales and
profits of many companies
were hit hard.
However, it has a
favourable effect for
targets in FY 2017-18.
#22) High consumer
spending
There was an increase
in consumer spending
the festival season.
Consumer demand was
high during in October
(Diwali) and December
(Christmas)
This could help
companies register
higher sales and profit
growth in the quarter.
#33) Momentum in
earnings
Effect of demonetisation
and GST are waning.
This means Q3 will
rebound.
Here are the growth
estimates for the quarter
according to Edelweiss
Securities Ltd:
The values indicate a 4%
growth in Earnings-per-
Share (EPS) for the first
time in the yearParameters Growth (YoY basis)
1 Revenue 20%
2 EBITDA 12%
3 Net Profit 12%
#44) Sector-wise
expectations
Many sectors are likely to
perform well.
NBFCs, auto and cement
are likely to lead earnings
growth.
Metals, oil and gas and
consumer companies are
also poised for good
returns.
The pharma sector may
face a few hurdles though.
Higher competition and
regulatory issues
(especially in the US)
could weigh down this
sector.
#55) To sum up
Revival in earnings is a
very crucial factor for
valuations to sustain in the
market.
But regardless of
valuations, most analysts
expect Q3 earnings
results to be positive.
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