Ghost of demonetisation and GST to haunt Q2FY18 results
PL universe to have a better Q2FY18 with 15.3% increase in revenue and 12.6% increase in net earnings. The growth is mainly driven by good performance coming from three sectors, Metals with a 24.7% revenue growth and 170.1% PAT growth, Oil & Gas with 20.1% revenue growth and 21.8% growth in PAT, and financial services with 18.8% increase in NII and 18.0% PAT growth all on a YoY basis.
Private capex slow, Credit growth continues to be anemic
The credit growth continues to be anemic and hovers around 6.6% for August 2017. Even the smaller increase that we have seen could be due to increase in commodity prices leading to higher working capital requirements rather than any increase in any capex loans. The liquidity continues to be abundant and with banks forced to drop deposit rates, the spreads could come under increased pressure. We continue to strongly believe that unless we see increase in domestic capacity utilization, the private sector project capex is unlikely to happen in a hurry. This will keep the spreads under pressure.
Nifty Earnings for FY18 reduced further
Overall Net earnings for the Nifty is expecetd to increase 13.2% in FY18 (down from 14.9% in September estimates) and 20% in FY19. In both the years, the earnings will be driven by banks & financial services. BFSI is expected to have a 24.4% earnings growth in FY18 and 34.9% in FY19.
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