India Strategy Report Back
India Strategy & Earnings Review: Earnings picture getting brighter
16-Feb-2018

After beginning on a strong note, the 3QFY18 earnings season lost sheen toward the end, led by disappointment from heavy-weights like SBI, Tata Motors, Lupin and ONGC. However, what’s more encouraging is that the earnings picture is getting brighter, with the recovery expected to gather pace in FY19. Key trends of 3QFY18:
1] Recovery in consumption-oriented sectors, with a broad-based volumes pick-up in Staples, Discretionary, Cement and Auto, albeit on a low base of demonetization and upbeat commentary on rural consumption.
2] Sequential asset quality improvement and a decline in slippages in Private banks, even as PSU banks posted a mixed performance onthe asset quality front.
3] Semblance of a recovery in order inflow for Infrastructure/Construction/Capital companies after the GST-related pangs of 2QFY18. 4] Optimistic commentary in IT sector after a while, even as 3QFY18 saw a good beat from tier-II IT names.