Impact of GST, demonetisation are now behind; say analysts


New Delhi, Feb 16: After India Inc reported earnings that were in line or better than analyst expectations, top market voices point out that the impact of structural reforms such as demonetisation and GST are now behind. According to a Bloomberg report, nearly three-fourths of the blue-chip companies in the Nifty 50 have reported results that matched or beat analyst estimates in the third quarter ended December-17. In a recent interview Jonathan Garner of Morgan Stanley told CNBC TV18, “We are cyclically at the beginning of an upswing in activity and in credit growth and therefore in corporate earnings. So look at corporate earnings growth. We should be getting at least high teens year-on-year (Y-o-Y) earnings growth for the next two years running.”
Experts point out that the earnings recovery has shown a promising trend, and have continued the momentum gained in the quarter ended September-17. Taking stock of earnings reported by India Inc in the July-September-17 quarter, research firm Motilal Oswal said that it was a ‘breath Gautam Duggad of Motilal Oswal Securities said, “The earnings have come as breath of fresh air and one can look forward to better earnings due to base effect and disruptions (GST and demonetisation) behind us.”
Experts had also pointed out that India Inc is entering into a double digit earnings growth after a very long period of time. “The positives from the structural reforms whether it is GST or demonetisation, should play out over 2018 and 2019. Corporate India, which has been plagued by single digit earnings growth so far, could enter into double digit growth,” Nilesh Shah of Envision Capital told CNBC TV18 last month.
“With the recent correction the overall valuations in the market have become quite reasonable. Also, the Q3 result season so far has been quite encouraging which further makes the market more reasonable. We continue to believe that midcap will be able to outperform large cap in the long run,” Alok Singh, CIO of BOI AXA mutual fund said. Nilesh Shah of Kotak Mutual Fund told in an interview that post stock market correction last week, quality midcaps and largecap stocks provide a very good opportunity for the investors.