After RBI positively surprised the markets with structural liquidity boost and 25 bps repo rate cut in its first bi-monthly policy review for 2016-17, the markets now will be glued to the Q4FY16 earnings results. There have been significant downgrades over the past few months, and the risk still persists. Hence, the key question from the earnings season will be – Is the worst behind us and would earnings recover going forward?
For companies under our coverage (164 companies [ex-OMCs]), we estimate the topline to post a modest recovery with a 4% YoY growth in the quarter after four straight quarters of decline. We estimate EBITDA growth to remain tepid at 5% YoY; however, adjusted PAT growth will continue to remain negative, at -1% – the sixth consecutive quarter of de-growth. For Sensex companies, we estimate topline and EBITDA to grow by 6% YoY and 12% YoY, respectively. We estimate adjusted PAT to grow by 8% YoY.
Going forward, we expect earnings to grow on the back of economic recovery through FY17 given the liquidity push by RBI along with rate cuts, expected stimulus from the central pay commission, likely normal monsoon, and a favorable base.
India
NRI
