Eye on Q4 earnings: Experts discuss what to expect from Pharma, FMCG & other sectors

The fourth quarter results season will begin in a few days. It has an advantage of the low base of the demonetisation quarter but it also has the disadvantage of some continued GST adjustment and weakness in corporate banks.

To discuss what should one expect from different sectors like IT, FMCG, autos, capital goods, oil & gas, pharma, cement, metals, realty, power, telecom etc., CNBC-TV18 spoke to their in house research team and market experts Nischal Maheshwari, Head - Instl Equities, Edelweiss Securities Gautam Duggad, Head-Institutional Equities, MOSL and Sanjiv Bhasin, Executive VP-Markets, IIFL who know the numbers like the back of their hand.

The fourth quarter of FY 18 has traditionally been ideal for cement companies, but this time around cement prices failed to rise in the busy season, despite rising cost pressures, Edelweiss said in a note, expecting that the cement industry will be a disappointment in the quarter.

Also Read: Cement has had its challenges in the fourth quarter

In terms of the fourth quarter of 2018, the ferrous stocks may report a better-than-expected quarter owing to the sharp price increase, while from non-ferrous space, Nalco is likely to deliver strong results owing to the surge in alumina prices.

Also Read: Metal sector may report better results owing to surge in prices

Fuel wise, while the coal-fired plants reported a moderate growth given the shortage of coal supply, hydro generation was a bit weak given lower snowfall. While the early onset of summer might create challenges for distribution companies, it augurs well for consumer durable players like Voltas, Havells etc.

Also Read: Early onset of summer: Someone’s pain is someone else’s gain

Fourth quarter is seasonally strong for industrial and infrastructure companies. Margins are expected to remain stable while order-books are expected to burgeon given the flush of order inflows especially for roads and transmission and distribution space.

Also Read: Execution ramp up to drive Q4 earnings in the infra sector

For pharma companies, domestic markets should perform better though. Expect up to 10% growth due to normalising of operations post GST and a favourable year-on-year base due to demonetisation.

Also Read: Pharma poised for another painful quarter

FMCG sector earnings were most impacted by demonetisation & Goods and Services Tax (GST) related hiccups last year. GST rates for a large swathe of daily consumption items were revised lower in November 2017, so Q4 FY 18 will have the first full quarter impact of lowered prices and higher off-take.

Also Read: FMCG Q4 FY18: Sector Expectations - The Hope Of Sustained Recovery

The average revenue per user (ARPU) will continue to slip in the upcoming quarter, despite strong subscriber addition on account of migration of Aircel and Reliance Communications’ (RCOM) subscribers, Edelweiss said in a note. Jio has signalled cut throat competition will continue, with the company providing free prime services for its subscribers for another year, contrary to market expectations that it will start monetising its users.