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MOSL: Morning India (10/July/18): 1. India Strategy - 1QFY19 Preview (‘Recovery’ ball starts rolling); 2. Expert Speak – Technology; 3. HCL Technologies- 4. Dish TV; 5. Metals Weekly

MOrning India (10/July/18): 1. India Strategy - 1QFY19 Preview (‘Recovery’ ball starts rolling; Confidence on earnings recovery improving); 2. Expert Speak – Technology (Acceleration on a low base sans BFS); 3. HCL Technologies; 4. Dish TV; 5. Metals Weekly

 

Today’s top research theme

India Strategy – 1QFY19 Preview: ‘Recovery’ ball starts rolling; Confidence on earnings recovery improving; It’s a story of improving micros and challenging macros

Earnings rebound aided by a low base and Global Cyclicals; Technology to stage a strong comeback:

• The 1QFY19 earnings season is likely to benefit from the favorable base of 1QFY18, when pre-GST destocking by trade had impacted several sectors.
• We expect MOSL Universe PAT to grow 26% YoY on a low base (6% earnings decline in 1QFY18). Global cyclicals are likely to drive the performance for the second consecutive quarter (with 54% YoY profit growth) and account for 65% of incremental profits. Defensives are expected to post 15-quarter-high profit growth of 14%, aided by IT and Consumer.
• We expect Nifty sales, EBITDA and PAT to grow 23%, 23% and 26% on a base of 11%, 4% and (6%), respectively. PAT growth of 26%, if delivered, will be the highest in 16 quarters.
• Our Nifty EPS estimates are largely stable for FY19 and FY20 at INR580 and INR694 v/s INR579 and INR693 earlier, respectively. We are building in Nifty EPS growth of 26%/20% for FY19/20.

Piping hot news

PE Funds, companies in race to acquire Kraft Heinz India’s consumer food unit

• Bulge-bracket private equity funds such as Blackstone and Carlyle are said to be competing with domestic and international strategic buyers such as Abbott, Emami, WiproNSE 0.82 % Consumer Care, Zydus Wellness and ITC to buy the consumer food division of the Kraft Heinz Co. in India.