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MOSL: Morning India (10/July/19): 1. India Strategy (Last man standing!); 2. TCS; 3. Bajaj Finance; 4. Delta Corp

MOrning India (10/July/19): 1. India Strategy (Last man standing!); 2. TCS; 3. Bajaj Finance; 4. Delta Corp

 

Today’s top research theme

India Strategy 1QFY20: Last man standing! Banks continue dominating earnings revival

• The 1QFY20 earnings-report season will likely be a repeat of 4QFY19, with financials driving the performance singlehandedly. Corporate banks will account for entire growth in the Nifty and the broader MOFSL Universe's earnings. Autos will have another lackluster quarter. IT sector profit growth will come off in this quarter. Consumer sector is also expected to report a muted quarter.
• We expect MOFSL Universe PAT to grow 7% YoY, led by Financials and dragged by Metals. Global Cyclicals are likely to post a decline of 16% in profits, while Defensives are expected to post flat profits YoY. Domestic Cyclicals will post 49% YoY jump in PAT. Nifty sales/EBITDA/PAT is expected to grow by 6%/1%/10% in 1QFY20.
• Our FY20/21 Nifty EPS estimates have been cut by 3.4%/2.1% to INR583/INR691 (prior: INR604/INR706). We are now building in EPS growth of 21.1%/18.5% for the Nifty for FY20/21. Excluding corporate banks, we are expecting 7.5% profit growth for the Nifty in FY20.

Piping hot news

Rain deficit narrows to 17%, but masks slippage in South

The strong monsoon over North India may have helped cut down rain deficit to 17 per cent for the country as a whole till date on Tuesday, but it tends to mask the persisting deficit in the South. Tamil Nadu (49 per cent) leads the deficit chart in the South, with Kerala (45 per cent) is not far behind exactly a month after the monsoon made a delayed onset along the Kerala coast.