Moneycontrol
Last Updated : Nov 04, 2018 10:18 AM IST | Source: Moneycontrol.com

A mixed results season so far, Nifty EPS growth for FY19 expected to decline

Vineeta Sharma of Narnolia Financial Advisors said Nifty EPS growth for FY19 post the results are expected to come down from 15 percent to 12 percent

Moneycontrol Contributor @moneycontrolcom

Vineeta Sharma

Narnolia Financial Advisors

Six hundred and fifty listed companies have reported average sales growth of 10.8 percent and net profit growth of 7.1 percent in on-going quarterly results so far.

Interestingly, largecaps sales grew at an average of 18 percent, while midcaps sales grew 12.5 percent. Small and microcap companies reported 8.9 percent topline growth.

Largecaps reported 12 percent growth in net profit while midcaps reported a good 17 percent PAT growth. Small and microcap companies reported poor 1.6 percent net profit growth for the quarter. 13 percent of companies have reported a net loss this quarter. Results of ICICI Bank, Nestle, Marico, L&T and Zee Entertainment were the key positives this quarter.

On a sectoral basis, industrial sector companies reported good results. Larsen and Toubro, Cummins India, AIA engineering, Kalpataru Power, KEC—all have reported better-than-expected growth.

Financials reported in-line numbers. NII growth for the industry slowed as expected due to rising interest rate, though the asset quality was maintained. Most Banks/ NBFCs disclosed IL&FS exposure in the books and the provisions made hitherto in their management concalls and this surely will reduce the uncertainty prevailing in the sector.

Insurance companies came out with better-than-expected growth and management commentary suggests growth remain intact going forward.

In the energy sector- Reliance results were mixed. Automobiles reported an in-line set of numbers. Margin pressure eased in comparison to last quarter. Slower volume growth around 8-12 percent is being hinted for companies for the full year.

FMCG reported volume growth slightly lower than the last quarter but still around low double-digit figures on account of better rural growth.

IT companies' margin expansion was offset by pending wage hike, Infosys management commentary remained strong on new and renewed deals.

Amongst cyclical, metals reported an in-line set of numbers. Cement reported worse-than-expected margins on account of elevated power, fuel and freight costs amidst lower capacity utilisation on account of lower volume growth.

Quarterly results release of 75 percent Nifty companies weighing 85.6 percent hint of another downgrade in EPS for FY19. Nifty EPS growth for FY19 after the results are expected to come down from 15 percent to 12 percent.

SBI and ONGC quarterly results that hold the maximum delta for Nifty earnings will be eagerly watched as they still may change the course of the trend of Nifty earnings.

The author is Head of Research at Narnolia Financial Advisors.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Nov 4, 2018 10:18 am
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