Time for Q3 earnings: What are the market expectations?

The earnings season

for the third quarter of

FY 2017-18 is under

way.

For the first time in 12

months, experts are

upbeat about this

quarter’s performance.

The reasons are:

#11) Low earnings base

A low base in FY2016-17

is one of the major

reasons.

Demonetisation in

November 2016 had a big

impact on consumption.

As a result, sales and

profits of many companies

were hit hard.

However, it has a

favourable effect for

targets in FY 2017-18.

#22) High consumer

spending

There was an increase

in consumer spending

the festival season.

Consumer demand was

high during in October

(Diwali) and December

(Christmas)

This could help

companies register

higher sales and profit

growth in the quarter.

#33) Momentum in

earnings

Effect of demonetisation

and GST are waning.

This means Q3 will

rebound.

Here are the growth

estimates for the quarter

according to Edelweiss

Securities Ltd:

The values indicate a 4%

growth in Earnings-per-

Share (EPS) for the first

time in the yearParameters Growth (YoY basis)

1 Revenue 20%

2 EBITDA 12%

3 Net Profit 12%

#44) Sector-wise

expectations

Many sectors are likely to

perform well.

NBFCs, auto and cement

are likely to lead earnings

growth.

Metals, oil and gas and

consumer companies are

also poised for good

returns.

The pharma sector may

face a few hurdles though.

Higher competition and

regulatory issues

(especially in the US)

could weigh down this

sector.

#55) To sum up

Revival in earnings is a

very crucial factor for

valuations to sustain in the

market.

But regardless of

valuations, most analysts

expect Q3 earnings

results to be positive.