MOSL: Morning India (7/June/17)-1. India Strategy (4QFY17 Earnings Review); 2. United Spirits; 3. Economy (Fuel or Engines); 4. Metals Weekly
​MOrning India (7/June/17): 1. India Strategy (4QFY17 Earnings Review); 2. United Spirits; 3. Economy (Fuel or Engines); 4. Metals Weekly
Today’s top research theme
4QFY17 Earnings Review: Aggregate performance masks underlying weak operating dynamics
Earnings season concluded with aggregate MOSL Universe headline numbers meeting our expectations and Nifty earnings beating expectations by 6%.
Nifty has rounded off FY17 with 8% earnings growth, while the broader MOSL Universe posted 15% earnings growth.
However, looking beyond the numbers, the underlying operating performance still doesn't exhibit broad-based strength. 42% of our Universe reported profit decline v/s 34% in 3QFY17.
The 4QFY17 beat at Nifty PAT level is accounted for by just four companies - Tata Motors, Tata Steel, L&T and Reliance.
Cyclicals drove the quarterly performance, aided by low base. Defensives posted another quarter of earnings decline, dragged by Technology and Healthcare. Contribution of Defensives to our Universe PAT shrank further.
In our Universe, we downgraded ratings for 17 stocks and upgraded ratings for five stocks in 4QFY17. We have marginally revised our Sensex EPS estimates upwards for FY18/19 by 0.6%/0.9% to INR1,581/1,922.
Piping hot news
IMD sticks to normal monsoon forecast at 98% of long period average
Expectations of a normal monsoon were reinforced with the meteorological department raising its estimate of rainfall to 98 per cent of the long period average (LPA).
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