FY18 earnings to decide trajectory of equities

Starting this week, India Inc would again gear up for its busy quarterly earnings period. The question is if corporate India would match investor expectations. With the goods and services tax (GST) taking effect on July 1, the expectations are extremely toned down for the June quarter, the first (Q1) of the financial year 2017-18. Analysts at Edelweiss expect a moderate 12 per cent revenue growth for 225 companies under its coverage, while net profit growth might dip by up to 2 per cent, on the back of a 262-basis point decline in operating margins. Future & Option Trading Tips

However, it is essential that at least these lowered targets are met, to keep India’s position among global equities, especially emerging markets. This is particularly important when foreign investors such as UBS, CLSA and Credit Suisse question if Indian equities justify their premium valuations, as earnings growth have remained elusive for over four years in a row. Financial Astrology Tips

In FY14, the Nifty companies were poised to post earnings per share (EPS) of Rs 441; the actuals were about Rs 386. The narrative was the same in FY15, FY16 and FY17. With earnings growth failing to meet expectations, the FY18 estimates have been cut. In Bloomberg polls, the FY18 EPS estimate is now Rs 523, from Rs 539 as on end-March. And, much lower than the initial expectation of Rs 740 at the start of FY15. The Street usually computes its estimates on a two-year forward basis. Astrology and Numerology Trading Tips