Glimmer Of Hope

The first quarter results have been fairly robust. A revival seems round the corner.

- Niti Kiran

For India Inc., the first quarter of 2018/19 is turning out to be exactly what the doctor ordered. It delivered what every investor had been hoping for years — strong signs of an earnings revival. An analysis of 717 listed companies (excluding oil & gas and banking, financial services and insurance companies) whose first quarter data was available with database AceEquity throws up encouraging results. The sample registered year-onyear revenue growth of 10.8 per cent, the fastest in 16 quarters.

Harendra Kumar, Managing Director, Institutional Equities of Elara Capital, says the strong performance seen thus far in Q1 is a big positive. “We entered this fiscal with expectation of compounded annual growth rate of 20-22 per cent in earnings over 2018/19 and 2019/20. This is a good start as it provides supportive cushion at current levels. Talking about the broader business environment, Q1 is also likely to benefit from low base effect and, therefore, the expectation of strong numbers was always there,” he says. If oil companies are added to this basket, the revenue growth improves to 15.7 per cent. “Oil companies’ top line was aided by higher prices of crude oil and its derivatives and some volume growth,” says Deepak Jasani, Head, Retail Research at HDFC Securities. Crude oil prices have risen around 41 per cent over the past one year, though they have fallen below $70 a barrel in the first fortnight of the second quarter.