With the earnings season about to begin, what should investors focus on in the March quarter corporate results? What are the main trends and themes they should keep their eyes on? What answers are the March quarter earnings expected to provide to the questions in the minds of investors? Sure, expectations are that earnings growth will increase, but investors will focus on cues about the sustainability of earnings, any change in trends, and emerging threats and opportunities.

We take a look here at key issues in various sectors:


Though the sector is likely to be among the key drivers of improvement in overall March quarter earnings, investors would want to know whether increasing global protectionism has hurt auto ancillary firms with a foreign presence, and the overseas business of Tata Motors Ltd.

Secondly, volume growth in the automobile sector was largely driven by a low base. Two-wheeler and tractor sales were aided by better rural demand and new launches; so, commentary on whether the volume growth will be sustained is something that investors should watch out for.

Other areas of interest would be market share gains, outlook on margins given rising input costs, and the potential threat to sales and profitability from regulatory changes.


Apart from movement in yields (pricing), any indication from the managements of the three listed aviation companies regarding bidding for Air India Ltd would be a crucial input for investors in aviation stocks.


The Reserve Bank of India (RBI) in February withdrew various restructuring schemes (Strategic Debt Restructuring, Scheme for Sustainable Structuring of Stressed Assets, 5/25) and that is expected to have a significant bearing on the asset quality of banks in the March quarter. So, the quantum of slippages reported by banks will be an obvious thing to watch out for.

As the first list of NCLT (National Company Law Tribunal) accounts is in the final phase of resolution, the focus will shift to the second NCLT list of accounts, which as per analysts, are expected to force higher haircuts. Any management commentary on this would be welcome.

On the positive side, banks are expected to benefit from RBI’s recent dispensation to spread mark-to-market losses over four quarters, which will lead to a reversal in last quarter’s investment provisions. But investors should look through such cosmetic accounting changes.

Capital goods

In the absence of private sector capex, new orders continue to be driven by government-led projects. Commentary on the pace of order inflows, investment activity in domestic economy (industrial capex) and overall capex scenario will be closely watched.

Investors would want to know the trends in brownfield investment enquiries, whether they are continuing or not, and the state of greenfield investments.


In the roads segment, the highlight would be order flow growth considering the fact that the National Highways Authority of India has ordered projects worth 7,400km in fiscal year 2018, more than half of which were in the past two months.

Commentary on existing backlog of orders and execution of awarded projects by road EPC (engineering-procurement-construction) companies is crucial.

Investors would want to know how well are BOT (build-operate-transfer) focused companies adjusting to the Hybrid Annuity Model.

Consumer goods

With the initial disruption of the goods and services tax (GST) on supply chains receding and rural growth showing a gradual pickup, volume growth trajectory would be the key.

Commentary on market share gains, if any, from the shift to the organized sector in the GST-era and price increases to pass on the burden of elevated input costs are other important triggers for the sector.

Information technology (IT)

One important factor that investors in IT stocks focus on is the annual revenue growth guidance by sector giants Infosys Ltd and HCL Technologies Ltd.

Apart from that, the demand outlook from large banking clients, commentary on digital spends and early indications on fiscal year 2019 client spending trends are some other important cues.


In the steel sector, funding plans will be in the spotlight. Given the ongoing insolvency process, existing companies may require to borrow to fund acquisitions, which could lead to concerns of stretched balance sheets.

Capacity addition plans, if announced, will give some indication of capex requirements and growth plans.


In the March quarter, the recovery in sales growth seen in the domestic market is expected to continue. US sales growth of some companies may improve due to launches, but investors will be more interested in management commentary about overall pricing pressure.


The power sector has been a laggard. Despite the higher-than-normal spot power tariffs in the December quarter, major companies did not see noticeable benefits as high fuel costs and limited availability of fuel crimped benefits.

Investors will be keen to know the preparedness of power producers to benefit from the high merchant power rates and expectation of a hotter summer season.

Real estate

Developers are said to have taken price cuts and have offered discounts to push unsold inventory, especially in the housing segment. Investors would want to know if these measures translated into increased sales and the impact on overall debt.

They would focus on whether Real Estate (Regulation and Development) Act-related compliance issues are now out of the way.

Commentary on progress of new launches across segments will also be important.


Competitive intensity in this sector is expected to remain high, so the impact on revenues of other telecom companies due to Reliance Jio Infocomm Ltd’s pricing moves and international termination rate cut would be keenly watched.

Also, with the recent exit of Reliance Communications Ltd and Aircel Ltd from the sector, an important data point for investors would be addition to the subscriber base of incumbents.

My Reads Logout