Published on 16/04/2018 3:01:22 PM | Source: Prabhudas Lilladher Ltd

Quarterly Preview - Q4FY18 results to be better - Prabhudas Lilladher

Quarterly Preview

Q4FY18 results to be better

PL universe is expected to have a good Q4FY18 with revenue up 11.6% YoY and 8.6% QoQ, PAT up 11.9% YoY with and 5.9% qoq with EBITDA margins expected to expand 74bps YoY and contract 67 bps qoq. The growth in profits is despite a severe contraction expected in the BFSI sector due to increased credit costs leading to a reduction in PAT by 63.2% YoY and 56.9% qoq. The contraction in EBITDA margins is mainly on account of pressure in Oil&Gas as well as capital goods segments.

Private capex, Trade deficit, increasing Crude and low deposit growth, the new challenges

The credit growth have improved to 10.3% for the fortnight ended March 30 , 2018 while the deposit growth remained muted at 6% YoY. Trade deficit has been increasing consequent to an increase in crude prices and this is likely to insert an increased pressure on the Rupee. While the credit growth has been at 10.3%, the deposit growth was at 6.6% and the CD ratio for the banking system at 75.4% for the fortnight ended March 30, 2018 remains elevated. The liquidity seems to be hardening with the bond yields continuing to surge to 7.47%, from the 7.12% levels earlier in the month. Consequently, we have seen slight hardening of the lending rates.

Nifty Earnings for FY18 at Rs449.3

Overall Net earnings for the Nifty is expecetd to increase only 5.5% in FY18 to Rs449.3 (down from Rs505.2 in April 2017 estimates) and 22.0% in FY19. While banks have disapointed in FY18, BFSI is expected to lead the rally in FY19. BFSI is expected to have an overall contraction of 7.1% in FY18 and profit growth of 51% in FY19.

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