India Inc Q3 Earnings To Take Demonetisation Hit: Motilal Oswal Securities
Mumbai: Corporate profits for the third quarter will be adversely impacted by the Centre's move to demonetise bank notes of Rs 500 and Rs 1,000 denomination with sectors such as automobile, FMCG, retail and consumer durables expected to be hit, says a report by domestic brokerage Motilal Oswal Securities.
According to an analysis by Motilal Oswal Securities, with a low circulation of money, household consumption has taken a hit and caused businesses across sectors to decline in the range of 30-80 per cent within the first five days of the demonetisation move.
"Against the current backdrop, we expect October-December quarter earnings to be impacted the most," Motilal Oswal said in report titled 'Demonetisation: Feedback from the Ground Zero'.
Noting that with uncertainty surounding the duration of liquidity recalibration, it was difficult to quantify the earnings impact, the brokerage said "post-demonetisation, there were obvious downside risks to 2016-17 earnings estimates".
"We believe autos, FMCG, retail, consumer durables, mid-caps, cement, telecom and NBFCs could see earnings downgrades for 2016-17," it added.
According to information compiled by Motilal Oswal, consumers are prioritising replacement/withdrawal/deposit of cash in banks/ATMs and there has been a marked drop in footfalls in stores, malls, restaurants and showrooms.
"The common thread running through sectors is significant moderation in consumption. Our discussions with various channel partners suggest that cash circulation has slowed down significantly in the economy after demonetisation came into effect," the report said.
It said that enquiries have dropped 40-60 per cent for four-wheeler auto dealers and the impact could last for a few more weeks till cash circulation and liquidity conditions improve.
"In real estate space, there has been a decline in home purchase transactions. Builders are tied up with operational issues, while buyers are adopting a wait-and-watch approach in anticipation of price correction," it said.
Observing positive long-term implications, it said corporates broadly agree that a combination of demonetisation and GST will aid the shift from the unorganised to the organised segment in several consumer oriented categories.Â
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
