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Q1 FY19 results: What to expect
Gradual progress
Publish date: 10th July, 2018
Auto & auto ancillary
- What to expect: Strong growth in revenues and net profits (yoy)
- Reasons for growth: Low base due to GST and strong demand
- Top performers: Bajaj Auto (43%) and Ashok Leyland (49%)
Building material
- What to expect: The sector is likely to grow by 11% yoy
- Reason for growth: Numbers are strong when compared to the GST-affected time period
- Pain points: Rising gas prices; increased competition in tile segment; delay in implementation of e-way bill (likely to last 1-2 quarters)
Capital goods and engineering
- Current status: Getting new orders but capacity utilization remains low (71 to 74%); the power sector has remained muted
- Reasons: The capital goods segment will remain subdued until next year’s general elections; the power sector will be impacted due to low supply of fuel or SEBI’s interest to sign long-term power purchase agreements
- Outlook: We see attractive opportunities in select areas (read full report). Long-term performance is healthy too
Cement
- What to expect: Universe coverage to grow by 23% yoy
- Outlook: Cement volumes to rise due to accelerated housing and infrastructure construction; rural demand
- Pain points: Cost pressure, caused by rising fuel price and pet coke, yet to be shifted to the consumer
Construction
- What to expect: Revenues to go up (3.2%); margins to stay strong while net profits to remain stagnant
- Outlook: Positive
- Reasons: Improvement in margin, working capital cycle, rise in demand
Consumer durables
- What to expect: The AC industry is expected to show flat or negative growth this quarter
- Reasons: Relatively low demand due to thunderstorms/dust storms in north India in April and May
FMCG
- What to expect: The sector is likely to see its earnings grow by 9.24% yoy; volume growth
- Reasons: High earnings due to strong demand and healthy margin; volume growth due to uptick in rural demand and counting of the unorganized sector post-GST
Information Technology
- What to expect: Q1 is usually strong
- Reasons: Rupee depreciation, digital growth and improving margins due to high demand
Logistics
- What to expect: Low double-digit growth in revenues
- Reason: High port volumes (Adani Port and SEZ between 10 and 15%)
Metals and mining
- What to expect: Companies in ferrous space to report strong earnings; non-ferrous companies to remain muted
- Reason: Ferrous companies benefit from rupee depreciation and high realization; non-ferrous companies experience headwinds due to rise in costs
Oil and gas
- What to expect: OIL India to have low realization because there may be a subsidy burden on PSU upstream companies; Refining margins to remain low due to fall in petrol and jet crakes; gas production to decline marginally
Paints
- What to expect: Low double digit growth
- Reasons: Government infrastructure work, improving income levels and launches in the auto sector
Also read
- 5 interesting takeaways from Reliance AGM
- 3 reasons rising oil prices bother India
- Want financial guidance with your investments? Click here
- Why we have a BUY rating for Ashok Leyland
- Investment lessons from the football field
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