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MOSL: Morning India (31/October/18): 1. India Strategy (2QFY19 interim earnings review); 2. Tech Mahindra; 3. Technology; 4. Pidilite Inds; 5. Container Corp; 6. ABB; 7. Bank of Baroda; 8. LIC Housing Fin.; 9.

MOrning India (31/October/18): 1. India Strategy (2QFY19 interim earnings review); 2. Tech Mahindra; 3. Technology; 4. Pidilite Inds; 5. Container Corp; 6. ABB; 7. Bank of Baroda; 8. LIC Housing Fin.; 9. Emami

 

Today’s top research theme

India Strategy: 2QFY19 interim earnings review; largely in-line so far

• The 2QFY19 earnings season has been uneventful so far, with headline numbers broadly meeting estimates with a few disappointments.
• For the MOSL Universe, sales, EBITDA and PAT grew 25.8%, 13.9% and 6.3% YoY, as against expectations of 23.6%, 14.1% and 9.0%, respectively.
• Sales, EBITDA and PAT for the 28 Nifty companies have grown at 27.0%, 14.1% and 5.8%, as against expectations of 24.4%, 13.2% and 9.0%, respectively.
• The earnings upgrade/downgrade ratio is < 1, with 13 MOSL Universe companies witnessing upgrades of 3%+ and 27 witnessing downgrades of more than 3% - still suggesting a tepid earnings backdrop.
• Based on the results of the 28 Nifty companies, we have revised Nifty FY19E/20E EPS estimates to INR528/665 versus earlier estimates of INR539/674.
• Top FY19E Nifty EPS upgrades: Bajaj Finance (8%), Dr. Reddy (4%) and HDFC Bank (2%). Top FY19E Nifty EPS downgrades: Bharti Airtel (Loss), Ultratech Cement (22%), Yes Bank (11%), IndusInd Bank (10%), Reliance (8%), Wipro (4%), and Maruti Suzuki (4%).

Piping hot news

FinMin raises liquidity concerns, RBI says cash crunch not severe

• Differences between the government and the Reserve Bank of India (RBI) were again evident in a meeting of the Financial Stability and Development Council (FSDC) on Tuesday, when they disagreed on the liquidity situation in non-banking financial companies (NBFCs) and the need for a separate payments regulator. Finance Minister Arun Jaitley, who chaired the meeting, told the RBI to ensure adequate liquidity in NBFCs was maintained and there was no knock-on effect on other NBFCs and other sectors but RBI Governor Urjit Patel held his ground in thwarting any spread of crisis, sources present in the meeting said.