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Q4 earnings stay just above St estimates

Experts have cut FY18/FY19 Sensex earnings per share (EPS) estimates by 4% to Rs 1,572/Rs 1,904

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The fourth quarter FY17 results so far have been in line with analyst estimates.

The aggregate earnings of companies on BSE100 that have announced results have so far, overshot estimates by 2.14%, while aggregate sales have surpassed expectations by 2.45%. The financial sector firms posted the best performance at 22.39% on the revenue front. However, they have undershot aggregate profit estimates by 12.36%.

The Sensex companies that have announced results have lagged sales estimates by 1.31% while they have surpassed earnings estimates by 1.08%. Aggregate sales surprise on Nifty was 2.03% while for net profit it was 2.19%. Experts have cut FY18/FY19 Sensex earnings per share (EPS) estimates by 4% to Rs 1,572/Rs 1,904.

In the banking sector, both ICICI Bank Ltd and Kotak Mahindra Bank Ltd results buoyed markets while HDFC, Indiabulls Housing Finance and Mahindra and Mahindra Finance disappointed. The remaining lenders are expected to post 18% YoY PAT growth.

The aggregate sales in basic materials surpassed estimates by 12.39% while earnings grew 10.99%. While Tata Steel, Coal India, UPL Ltd, Tata Chemicals are yet to declare results, Hindustan zinc posted 12.39% sales and 10.99% earnings.

The consumer goods sector seems to be still bogged down by demonetization, with aggregate sales lagging estimates by 4.78% though profits grew 1.26% over estimates. Dabur India earnings fell 2.37% short of estimates while its sales lagged estimates 5.46% followed by Marico Ltd (3.79% lag for sales though its profit overshot by 9.29%). Results of others like Nestle India, Britannia Industries, Colgate Palmolive India, Motherson Sumi System are yet to be announced, analysts have predicted mixed performance for the sector, hinging hopes mainly on the large caps.

Further, auto players which are yet to post earnings results, are expected to come up 32% YoY decline in PAT, led by Tata Motors (-74% YoY). Excluding this, autos PAT should grow 2%, analysts say. Cement, telecom, media, retail and utilities would have a lacklustre quarter, with YoY earnings decline, they said.

Utilities were gloomy. Despite witnessing 39.36% gain in sales, earnings stood at a loss of 73.86%. Earnings of Reliance Infrastructure and Reliance Power Ltd fell 92.72% and 32.46% respectively. However, Tata Power Co Ltd is yet to announce results.

Technology surpassed earnings estimates by 1.86% with sales increasing 3.55%. Wipro climbed 2.75%, TCS 3.01% and Infosys rose 0.27%. However, HCL, Tech Mahindra results are awaited. Analysts are expecting good results from both companies.

The market has priced in double-digit growth owing to a stronger rupee, weaker oil and the local inflows being the best so far. However, such optimism may not play out in going ahead given that the midcaps and smallcaps are trading way ahead in valuation than large caps which have been in line with analyst estimates so far.

"Exercise caution with midcaps and small caps that are witnessing a spike in valuations on the back of rupee's strength, oil's weakness and robust local flows," Sanjiv Bhasin, executive vice-president, IIFL, said.

SEASONAL SHOWERS

  • Experts have cut FY18/FY19 Sensex earnings per share (EPS) estimates by 4% to Rs 1,572/Rs 1,904
     
  • The financial sector firms posted the best performance at 22.39% on the revenue front
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