MOSL: Morning India (5/November/19): 1. India Strategy (2QFY20 interim earnings review); 2. HDFC; 3. Bharat Electronics; 4. Jindal Steel and Power; 5. SRF; 6. Godrej Agrovet
MOrning India (5/November/19): 1. India Strategy (2QFY20 interim earnings review); 2. HDFC; 3. Bharat Electronics; 4. Jindal Steel and Power; 5. SRF; 6. Godrej Agrovet
Today’s top research theme
India Strategy: 2QFY20 interim earnings review; Operationally in line; tax cuts drive profit beat
- The September quarter earnings season is at the halfway point, with 92 MOFSL Universe and 28 Nifty companies announcing their results as of 2nd Nov'19. While the aggregate earnings has been inline with estimates, commentary is turning incrementally positive, especially on the Consumption front.
- Sales, EBITDA, PBT and PAT for the 28 Nifty companies have grown at -0.6%, 9.1%, 10.6% and 12.4% YoY, as against our estimates of -0.4%, 1.7%, 9.7% and -1.8% YoY, respectively. Of the 28 Nifty companies that have announced their earnings, 22 have either met or exceeded our PBT estimates.
- For the MOFSL Universe, sales, EBITDA, PBT and PAT grew -0.3%, 7%, 9.2% and 12.5% YoY, as against our estimates of 0.5%, 2.9%, 10.6% and 1.5% YoY, respectively.
- The earnings upgrade/downgrade ratio has been balanced so far, with 31 MOFSL Universe companies witnessing upgrades of more than 3% and 29 witnessing downgrades of more than 3%, indicating a revival in earnings momentum.
- Our FY20 Nifty EPS estimates have been stable at INR536. We are building in Nifty EPS growth of 11.5% for FY20.
Piping hot news
India decides to opt out of RCEP, says key concerns not addressed
India won’t join the Regional Comprehensive Economic Partnership (RCEP) because concerns about getting swamped by imports under the agreement — putting its domestic industry and agriculture at risk — haven’t been assuaged. The RCEP, which includes China and the Association of Southeast Asian Nations (Asean), aims to cover about a third of the world economy and half its population.
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