India’s Earnings Scorecard Shows Worst Profit Slump Since 2014

India’s Earnings Scorecard Shows Worst Profit Slump Since 2014

Bloomberg  | Jun 04, 2020 11:54

India’s Earnings Scorecard Shows Worst Profit Slump Since 2014

(Bloomberg) -- The world’s biggest lockdown has cost India millions of jobs, resulted in record low economic activity, and fueled the biggest earnings decline in at least six years.

Profits at NSE Nifty 50 Index members fell about 15% last quarter from the same period last year, the worst drop since at least 2014, according to Bloomberg-compiled data. About two thirds of the firms in index have announced results for the March quarter so far. Communications, energy and industrials recorded the steepest declines on an adjusted basis.

Stay-at-home measures triggered by the coronavirus pandemic has kept most of India’s 1.3 billion population indoors since late March, leading to a collapse in business activities. Goldman Sachs Group Inc (NYSE:GS). expects gross domestic product to contract 5% in the fiscal year through March 2021, which would be India’s deepest recession ever. Meanwhile analysts have cut earnings forecasts for the Nifty 50 measure over the next 12 months by 13% since January, as India begins a phased lifting of the lockdown this month.

“We are expecting flattish profits, no growth, for the 2021 fiscal year,” said Gautam Duggad, head of research at Motilal Oswal Securities Ltd. He still sees more downside risks of earnings getting cut further “as we move forward and second or third order impacts manifest themselves.”

Key Highlights

  • All banks missed estimates as they set aside more money to save themselves against big loan losses from the pandemic.
  • Two of the five Nifty 50-listed tech firms posted disappointing earnings as lockdowns lead to payment delays and requests for discounts. Most of the major tech firms joined businesses globally to drop guidance.
  • Reliance Industries Ltd. -- the index’s largest stock -- announced a profit plunge of almost 40% from a year earlier.
  • Bharti Airtel Ltd., the mobile carrier that lost its position as India’s No. 1 to an upstart, reported a loss of 52.4 billion rupees ($694 million) -- its fourth straight quarter of losses.
  • Materials stocks, particularly cement companies such as UltraTech Cement Ltd. and Shree Cement Ltd., had the largest gain in profits among Nifty 50 members. Health care and consumer staples were the only other sectors to record growth.
  • Bajaj Finserv Ltd. has the steepest net income decline.

Analyst Comments

  • Analysts expect telecommunications and consumer staples to outperform as the economy reopens, while a slump in capital expenditure and discretionary spending hurts related sectors for the time being.
  • “The outlook for June is quite uncertain due to Covid-19 as both supply side and demand side issues will mar both topline and bottomline,” said Abhimanyu Sofat, head of research at IIFL Securities Ltd.
    • The Nifty is at an “important” level right now of about 10,000, he said. “As the lockdown starts opening up we see a change in leadership to insurance, rural and telecommunication stocks.”

©2020 Bloomberg L.P.

Related News

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Discussion
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (UK) English (India) English (Canada) English (Australia) English (South Africa) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
NoYes
CancelYes
Saving Changes

+

Download the Investing.com App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors.

Investing.com is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.