Q3FY17E volume, average realisations, costs and EBITDA/te for cement companies under our coverage are expected to be broadly flat YoY; though region-wise and hence company-wise trends could vary significantly. Volume growth in the South (+12% YoY on a low base) led by better demand in Andhra Pradesh / Telangana is expected to offset volume decline in the North / West regions. Similarly, higher
Q3FY17 will clearly be better for non-ferrous plays. Steel demand growth has been at 4-6% Y-Y. Steel companies will have to handle steeper RM costs starting Q3FY17, with average spot coking coal prices doubling and iron ore prices having increased by 20% between Q2FY17 and Q3FY17. Average steel price hike of Rs3,500 taken during the quarter will not be enough to offset this higher cost profile
Q3FY2017 result expectations
Weak demand, pricing pressure and change in sales mix to affect topline:
We expect the Q3FY2017 revenue of the Cement companies under our coverage (ex-Grasim) to decline by 0.9% YoY (down 14.1% QoQ), largely affected by lower demand on account of demonetisation (trade segment hit
Q3FY2017 result expectations
Sharp uptick in GRM and strong MS/HSD volume growth to drive Q3FY2017 earnings for OMCs:
The benchmark Singapore GRM increased by 32.1% to $6.7/bbl in Q3FY2017, led by improvement in crack spread - Gasoline (+ $3.7/bbl QoQ), Gasoil (+ $1.6/bbl QoQ) and Jet Kerosene (+ $1.7/bbl QoQ). More
Q3FY2017 result expectations
Demonetisation to weigh on Q3FY2017 performance; single-digit revenue drop expected:
The domestic Consumer Goods sector witnessed immense pressure in the initial days of high value note ban (Rs500/1000 note banned from Nov. 08, 2016), which significantly affected the domestic whol
Q3FY17 could prove to be another stellar quarter for oil & gas companies, given the improvement in macro parameters (higher oil prices, benchmark GRMs). OMCs could see significant inventory gains, resulting in GRM outperformance. RIL’s earnings are likely to surprise yet again, driven by improving petchem spreads and GRMs. Among gas utilities, GAIL should see the highest improve
Most companies in the RCML consumer universe saw tepid demand growth in Q3FY17 due to weak consumer offtake, further hit post demonetisation. We expect aggregate sales/adj. PAT to decline 0.9%/3.7% YoY in Q3, along with a 75bps EBITDA margin contraction. Emerging headwinds from input cost inflation could weigh down earnings growth further. We reiterate our negative stance on the sector.
Q3FY17 is proving difficult to predict as demonetisation has thrown up several moving parts. We expect a sharp drop in loan growth, but small-to-midsized banks (YES, IIB) should fare relatively better. Margins are likely to decline as benefits of the CASA influx will be offset by pressure on yields. The pace of slippages should reduce, but ageing NPAs would keep credit costs high. We expect fee
Banking & Housing Finance - Excess liquidity forces banks toward aggressive rate cuts - Angel Broking
Since Banks adopted MCLR, there had been a rate cut of 30 bps by SBI (from April 16-Dec16). However, with deluge of deposits at one hand and no corresponding demand for loans in the system, banks were forced to park the excess money in bond markets, which ideally would earn much lower rates than the lending rates in the current environment. In order to overcome the situation, banks have started
GRMs up, Inventory gains to help too
* Singapore complex GRM increased sequentially from USD5.1/bbl in 2QFY17 to USD6.7/bbl in 3QFY17. However, it was lower than USD7.8/bbl in 3QFY16. Rise in crude oil prices is also expected to help with inventory gains.
* While rise in oil prices would be beneficial for upstream companies, we expect operat
We expect the IT firms under our coverage universe to post a combined 0.2% sequential rise in USD revenue in 3QFY17E. We expect the Top-5 IT firms to post -1.3% to +2.4% qoq USD revenue growth in reported terms, with Tech Mahindra (TECHM) likely to lead, albeit aided by acquisitions. Among mid-sized firms, Persistent is likely to out-per
Our pharma universe is headed for a muted Q3FY17 with expected revenue/PAT growth of 11.8%/5.0% YoY. QoQ, EBITDA margins are forecast to contract 100bps and earnings to decline 5.1% due to competition in key products (gGleevec, gFortamet), price erosion in base US portfolios, a lack of material launches (barring gZetia for GNP and gTamiflu for NTCPH) and high R&D costs. Demonetization is an
Q3FY2017 result expectations
A weak quarter:
The October-December quarter has seasonally been a weak quarter for the IT companies, owing to furloughs and lower number of working days. This time, the already challenging business environment was further impacted by the cross-currency headwinds (led by depreciat
The OEMs posted muted performance in Dec’16 due to weak consumer sentiment as ongoing demonetization drive led to cash crunch in the system. The two-wheeler segment saw historically weak volumes due to weak demand in in rural segment.
CV Segment: Pre-buying may Aid in 4QFY17E
* As expected, CV segment was affected due t
Gradual recovery to continue at TECHM; seasonality and BFSI keep 3Q expectations modest
Expectations laid low by macro and seasonality…
After a seasonally strong 1H offered nothing to write home about, compounding of furloughs in the third quarter keeps our expectations muted. The situation would be fur
The key recent developments/data points on the oil & gas sector are:
* IOC’s Paradip refinery, on stabilisation, can achieve GRM of US$11.4-12.0/bbl at product cracks and crude prices prevailing in Q1-Q3FY17
* OMCs’ Q3FY17 GRM is estimated at US$6.8-7.4/bbl and RIL’s at US$10.7- 11.1/bbl boosted by product cracks recove
As per RBI data, deposit growth for the fortnight ended 23 December fell to 15.2% YoY, with banks witnessing a decline of Rs 0.75trn in deposit inflows over the fortnight. As per media reports, banks have received deposits worth Rs 15trn post demonetisation up to 31 December. Credit growth slid to 5.1% from 5.8% the previous fortnight. We think old denomination notes may also have been deposite
Improving cash flows for IOCL – our top pick among the OMCs
* Oil marketing companies (OMC) have outperformed the Sensex by 205% over FY14-16 and earnings growth has been 3.8x that of Sensex. As a result, higher RoEs (up from 10% to 18%) and lower gearing (debt:equity down from 1.5 to 0.75) make a case for a re-rating.
* The three oil
Two-wheelers: Ebb and flow
* TVS Motors (TVSM) two-wheeler (2W) volumes de-grew by 7% YoY, as motorcycle volumes de-grew by 19% YoY (down 14% MoM to 58,189 units). Scooter volumes too de-grew by 15% YoY (down 24% MoM) to 55,536 units. Interestingly, mopeds witnessed growth of 14% YoY (down 16% MoM to 65,883 units).
* Royal Enfield (RE) volume
The new tariff order from Telecom Regulatory Authority of India (TRAI) recommends a tectonic shift in the TV distribution space as it gives choice to consumers to select channels on a-la-carte basis without being burdened by high costs. This is likely to challenge the status quo and most players are worried that this will change the way they package and also have an impact on business model and
We met four microfinance companies (Satin Creditcare, SV Creditline, Capital Trust, Fusion) that have a large presence in North India (30-35% exposure), especially western Uttar Pradesh, as well as a smaller footprint in Madhya Pradesh and Maharashtra. In this report, we study the fallout of demonetisation and pre-poll political maneuvering on these region-specific portfolios. Our interactions
We maintain our positive view on Indian Construction sector as we believe that order inflows momentum to continue with the environment turning more conducive for execution of projects. Increase in investments towards Infra focused sectors (like Roads/Highways, Urban Development, Railways, Irrigation) would continue to drive order inflows for the companies. Also, the measures taken by Govt. (lik
We expect our telecom universe to report mixed QoQ wireless revenue in Q3FY17 due to slower data growth as we build in the full-quarter impact of R-Jio’s introductory offer. Margins are likely to remain range-bound despite seasonal tailwinds, given continued 4G rollouts and slower data growth. For Bharti-Africa, we expect a more stable performance as the currency has steadied. TCOM will h
Q3FY17 performance of incumbent telcos stands to be severely impacted by demonetisation and Reliance Jio’s (RJio) free services. Though telcos were allowed to accept old Rs500 notes (from Nov 25 to Dec 15), we believe the revenue recognition of this would be in Q4FY17 and likely limited. RJio extended its free offer till Mar’17, which prolongs the impact on incumbent operators&rsquo
* Favorable demographics are likely to induce structural tailwinds for the Indian dairy industry - a) shift from unorganized to organized market and b) upgradation to value added dairy products (VADP) from conventional product formats.
* Rising share of organized products: The organized segment is expected to grow at a CAGR of 19.5% over 2015-20, enhancing its share i