3 September 2017

Nifty 50 earnings analysis - Q1FY18

All Nifty50 companies have announced their results for Q1FY18. The Nifty50 companies have witnessed a topline growth of 9.59% (Q1FY18 vs Q1FY17) and a bottomline growth of 0.9% (Q1FY18 vs Q1FY17)

Margins for Nifty50 companies have shrunk and earnings growth is still awaited. We have been vocal about our opinion that if GDP is to grow at 8% p.a. and inflation stays at 6% p.a. then the earnings of the broader markets have to be around 14% p.a. (Read: Markets at a Crucial Juncture)

Revenue Analysis

8 companies saw their revenues slip on a Y-o-Y basis. Sun Pharma was the biggest loser with a 24.4% drop in revenues. Lupin and Bharti Airtel saw their revenues slip more than 10%.

On the positive side, Adani Ports saw the highest growth in revenues (41.94% Y-o-Y). A total of 10 companies gave a growth of more than 20% Y-o-Y.

PAT Analysis

22 companies took a hit in profitability on year-on-year basis. Sun Pharma slipped into losses this quarter. The overall profit growth of Nifty50 companies was very weak (0.9% YoY)
Some interesting cases, where the profits grew in double digits coupled with growth in revenues:

10 companies saw a growth in profits by more than 10% coupled with revenue growth.


The markets are trading at the upper band of historical valuations.
10 stocks with highest PE Ratio:

10 stocks with lowest PE Ratio:

While we are not recommending any stock here, however one can see clear trends of secular “Overvalued” or “Undervalued”. By secular we mean all metrics: PE Ratio, PB Ratio and EV/EBIDTA.

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