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MOSL: INDIA STRATEGY-3QFY19 interim earnings review-In-line performance so far-more upgrades than downgrades after long

India Strategy: 3QFY19 interim earnings review; In-line performance so far; more upgrades than downgrades after long

 

• 113 MOSL Universe companies and 34 Nifty companies have released their December-quarter results until 3rd Feb'18. Among these MOSL Universe companies, 71%/75% have delivered PAT/EBITDA that is either in line or above our estimate. Encouragingly, the trend in earnings revision has improved significantly this quarter, with the upgrade-to-downgrade ratio greater than one. Broader headline numbers of both MOSL Universe/Nifty have been in line with our estimates, with Consumption leading from the front and Corporate Banks exhibiting a smart recovery in asset quality.
• We note that companies that have reported their earnings so far comprise (a) 73% of estimated PAT for the MOSL Universe, (b) 71% of estimated PAT for the Nifty and (c) 58% of India's market capitalization.  

 

Key takeaways

• Of the 34 Nifty companies that have announced their earnings, 25 have either met or exceeded our estimates on both the PAT and EBITDA front. The earnings upgrade/downgrade ratio is > 1, with 35 MOSL Universe companies witnessing upgrades of 3%+ and 24 witnessing downgrades of more than 3%. This is a clear trend change after many quarters of downgrades. However, one-third of the Nifty companies are yet to report their results.
• For the MOSL Universe, sales, EBITDA and PAT grew 24.2%, 5.6% and 8.7% YoY, as against our estimates of 15.5%, 7.0% and 9.2%, respectively.
• Sales, EBITDA and PAT for the 34 Nifty companies have grown at 25.6%, 5.3% and 7.9%, as against our estimates of 14.8%, 5.6% and 9.3%, respectively.
• Approximately 75% (i.e. 84) of the 113 MOSL Universe companies have reported EBITDA that is either in line or above our estimates. On the PAT front, approximately 71% (i.e. 80) of the 113 companies have either met or exceeded our estimates.
• Among the Nifty constituents, Maruti Suzuki, Ultratech Cement, Yes Bank, SBI, IOC, Bharti Airtel and NTPC missed our PAT estimates, while L&T, Axis Bank, ITC, Asian Paints, Bajaj Finance, Reliance Industries and HCL Tech exceeded our estimates.
• Our FY19 Nifty EPS estimate is broadly unchanged at INR508. However, our FY20 estimate has been cut by 1.5% to INR638 from INR648. We are building in Nifty EPS growth of 12%/26% for FY19/20.