On an aggregate level, investors had better not have high hopes from India Inc.’s December quarter earnings. Bloomberg’s FY19 earnings per share (EPS) estimates for Nifty have continued to head southward. The fall in estimates is steeper for midcaps and smallcaps. Apart from headline revenue and profit figures, investors would also need to focus on cues about the sustainability of earnings, any change in trends, and emerging threats and opportunities.

We take a look at key issues facing some important sectors:

Automobiles: The dismal monthly sales data of automobile companies is a precursor to what lies ahead in terms of earnings. Apart from commentary on rural and urban demand, outlook on pricing, discounts and new launches ahead of BS-VI norms in 2020 are key things to look out for. For two-wheeler makers, update on exports would be significant, in the wake of US-China trade conflict and the sharp currency movements seen during the quarter. For commercial vehicles, investors would want to know if implementation of new axle load norms hurt demand for trucks.

Banks, non-banking financial companies (NBFCs): Asset quality trends are important when it comes to banks. So investors would want to get a fair sense of banks’ provisions to various group companies of Infrastructure Leasing and Financial Services Ltd (IL&FS). It would be interesting to see if banks gained market share from NBFCs post the IL&FS fiasco. Other monitorables include commentary on stress in lending to small and medium enterprises and the expected impact of the Reserve Bank of India’s guidelines on restructuring of advances related to micro, small and medium enterprises. For NBFCs, a key metric to watch out for would be asset-liability mismatch along with commentary on liquidity in the system.

Capital goods: Commentary on order inflows and pace of execution, given the forthcoming general election, would be important cues. Also, management commentary on a pickup in private capital expenditure including new greenfield projects will be keenly watched.

Cement: Besides outlook on demand and prices, new announcements with respect to capacity additions will be watched. On the operating cost front, investors would be keen to know the trend in petroleum coke prices, a key input material, and whether freight cost reduced due to new axle load norms.

Consumer goods: In the wake of the agrarian crisis in some parts of the country, commentary on demand from FMCG (fast-moving consumer goods) companies will be important to note. While input cost pressures have eased, investors need to remember that its impact on margins could come with a lag. According to analysts, volume growth in segments such as soaps and detergents would indicate if the goods and services tax-led shift in demand from unorganized to organized sector is happening.

Information technology (IT): Revenue growth in IT sector is typically sluggish in the December quarter, and the trend should continue. Investors will look out for commentary on demand for FY19, given that client discussions happen around this time of the year. In particular, there will be interest in recovery in the BFSI (banking, financial services and insurance) segment, and questions on how companies plan to mitigate higher costs from visa costs.

Metals: The after-effects of the ongoing US-China trade conflict are being felt on the latter’s real estate and auto sectors, thus impacting global demand for steel and other base metals. In this backdrop, commentary on demand will be a key factor to look out for. According to analysts, with large capacities running losses and falling inventories, global base prices may remain subdued, hurting realizations of Indian metal firms.

Telecom: Telcos barring Reliance Jio Infocomm Ltd are estimated to continue reporting losses in their wireless operations. Losses, however, aren’t expected to increase dramatically, since tariffs have been large stable sequentially. Investors will look for the possible impact on market share in the post-paid category for incumbents, and the response to the minimum recharge plans rolled out in October. Besides, trends in capex and cash flows will be key.

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