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Dec 21, 2017 12:10 PM IST | Source: CNBC-TV18

Mahesh Patil sees FY19 Nifty earnings at 19-20%; says crude at sub-$70 not a worry

Overall, he expects auto and cement names to show growth in earnings. For the second half of this fiscal too he expects good earnings trends.

CNBC TV18 @moneycontrolcom

With the onset of December quarter earnings around the corner, the focus is on corporate India’s performance for the second half of FY18 and the outlook for the next fiscal.

Aditya Birla Sun Life AMC anticipates a good earnings season going forward.

“Nifty earnings growth is seen at 19-20 percent for FY19, with strength seen in financials, corporate banks such as ICICI Bank, Axis Bank and State Bank of India,” Mahesh Patil, Co-Chief Investment Officer, Aditya Birla Sun Life AMC told CNBC-TV18 in an interview. There could be larger impact of provisioning seen in such cases, which is pulling overall growth much higher.

Additionally, he expects auto and cement names to show growth in earnings. Overall, for the second half, one should be seeing earnings growth, he told the channel.

Keeping this in mind, Patil sees no reason why multiples should correct despite stretched valuations.

Speaking on the rally in midcaps, Patil attributes it to better earnings growth than largecaps.

With crude at elevated levels of around USD 65 this year, what risks does it possess? Patil sees no major challenge for current account deficit till the commodity remains under USD 70. Additionally, the medium-term outlook on crude remains benign for him.

On a sectoral basis, he feels pharma stocks are largely a bottom-up play. One should be stock-specific where there are no issues of US FDA and have a good product pipeline. The sector may also see good earnings, following last year’s low base and decent price increases in their products too.

In the IT space, not much of improvement in growth outlook is seen. The sector still remains an underweight, he said, adding that salary increases can be added pressure for margin of IT companies.
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