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Morning India (18/August/17): 1. India Strategy – 1QFY18 Earning Review 2. Cement 3. Maruti Suzuki (AR) 4. Dish TV 5. Tata Elxsi

​MOrning India (18/August/17): 1. India Strategy – 1QFY18 Earning Review; 2. Cement; 3. Maruti Suzuki (AR); 4. Dish TV; 5. Tata Elxsi

Today’s top research theme

• India Strategy - 1QFY18 Earnings Review: Weak start to FY18; Earnings recovery remains elusive

• The 1QFY18 earnings season marked another quarter of weak performance and a subdued start to FY18. The performance was also hit by GST-related de-stocking in several consumer-oriented sectors – Auto, FMCG, Healthcare and Consumer Durables. Destocking-driven volume/top-line miss exacerbated the impact at EBITDA level, as it resulted in operating de-leverage.

• Nifty aggregate sales grew by 8.9% (est. of +5.9%), while EBITDA declined by 0.7% (est. of +4.6%) and PAT by 9.8% (est. decline of 1.1%).

• The underlying operating performance remains weak. 44% of our Universe reported a profit decline – a trend similar to 4QFY17.

• Domestic Cyclicals drove the performance, aided by a low base. Defensives posted another quarter of earnings decline, dragged by Healthcare. Metals stood out with earnings growth significantly above expectations.

• We have revised our Nifty EPS estimate downwards for FY18 by 2.6 % to INR484 and maintained FY19 Nifty EPS at INR602.