Ripples Advisory, investors look for in the March quarter results?
Expectations are that earnings growth will increase, but investors will focus on cues about the sustainability of earnings, any change in trends and emerging threats and opportunities
With the earnings season about to begin, what should investors focus on in the March quarter corporate results? What are the main trends and themes they should keep their eyes on? What answers are the March quarter earnings expected to provide to the questions in the minds of investors? Sure, expectations are that earnings growth will increase, but investors will focus on cues about the sustainability of earnings, any change in trends, and emerging threats and opportunities.
We take a look here at key issues in various sectors:
Automobiles
Though the sector is likely to be among the key drivers of improvement in overall March quarter earnings, investors would want to know whether increasing global protectionism has hurt auto ancillary firms with a foreign presence, and the overseas business of Tata Motors Ltd.
Aviation
Apart from movement in yields (pricing), any indication from the managements of the three listed aviation companies regarding bidding for Air India Ltd would be a crucial input for investors in aviation stocks.
Banks
The Reserve Bank of India (RBI) in February withdrew various restructuring schemes (Strategic Debt Restructuring, Scheme for Sustainable Structuring of Stressed Assets, 5/25) and that is expected to have a significant bearing on the asset quality of banks in the March quarter. So, the quantum of slippages reported by banks will be an obvious thing to watch out for.
As the first list of NCLT (National Company Law Tribunal) accounts is in the final phase of resolution, the focus will shift to the second NCLT list of accounts, which as per analysts, are expected to force higher haircuts. Any management commentary on this would be welcome.
Capital goods
In the absence of private sector capex, new orders continue to be driven by government-led projects. Commentary on the pace of order inflows, investment activity in domestic economy (industrial capex) and overall capex scenario will be closely watched.
Investors would want to know the trends in brownfield investment enquiries, whether they are continuing or not, and the state of greenfield investments.
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