FREE

MOSL: VOICES | INDIA INC ON CALL-Demand revival in the offing-Near-term disruption due to GST

​VOICES | INDIA INC ON CALL: Demand revival in the offing; Near-term disruption due to GST; pricing power coming back gradually

Earnings performance and management commentaries for 4QFY17 have belied the fears of the demonetization impact spilling over to 4QFY17. Commentaries from various B2C sectors indicate that consumption is the strongest pillar of the economy even as private capex takes time to revive. Banking remains a story of two halves – private banks eating into the share of PSUs, which grapple with the twin problems of asset quality and capitalization.

Commentaries from the B2C sectors like Auto (guidance of double-digit industry growth in PVs, 2Ws and tractors), FMCG (recovery in rural and wholesale markets) and Consumer Discretionary indicate positive demand momentum ahead, led by hopes of a second consecutive year of normal monsoon, lower interest rates, and the waning impact of demonetization. However, companies have cautioned about some near-term disruption due to GST implementation, as trade inventory de-stocking is likely to impact primary sales for a quarter even as demand remains intact. Management commentary in Pharma has remained tepid with the sector facing a host of issues, especially in the US market.

Capital Goods companies have shared cautious optimism on order inflow, with activities picking up in segments like transmission, renewables, defense, roads and railways. On the execution front, things have started to show some traction, with projects on hand getting timely executed. However, competitive intensity remains high.