"Many intelligence reports in war are contradictory;
even more are false, and most are uncertain."
—Carl von Clausewitz (German, 1780-1831)
Word for the day
Humblebrag (n/v)
(n) A statement intended as a boast or brag but disguised
by a humble apology, complaint, etc.
(v) To make such a disguised boast or brag, e.g., He's
humblebragging about how tired he is from his world travels.
Malice towards none
Should government define an amount, it is willing to spend
on bringing Vijay Mallya back home from UK?
Or no matter what we just want him back!
First random thought this morning
As per media reports, Infosys management, in its filing with SEC
of USA, has highlighted it's promoters' activism as a potential risk to the
company. Earlier, Wipro had highlighted president Trump's policies as a
potential threat to the company.
I fail to understand, why can't these tech titans understand a
basic thing - A business is only threatened when it becomes replaceable by an
efficient competitor or it becomes obsolete for failing in adapting to new
technologies and environment.
Rest all is, as someone said, "Covefefe".
Mid-Year review - 1
The current
result season is almost over. Broadly the market commentary over results has been
mixed. While there has been acceleration in earnings downgrades, the analysts
seem lacking conviction in their view. One may call it the bull market fear. No
one wants to swim against the tide.
The step to abolish 86% of the currency in circulation in November
2016, has been widely used as a balancing factor to explain the lower demand,
both consumer and investment. I am though not able to find anything backed by
adequate evidence to show that this had much impact in 4QFY17.
For record, in Q4FY17 collective PAT of Nifty companies grew
21.3%yoy driven by financials (+36.5% yoy), metals & mining (+302% yoy),
petrochemicals (+62% yoy) and construction (+31% yoy).
The strong performance by metals led to a spectacular rise in the
earnings of commodities companies (+70.8% yoy), while non-commodities’ earnings
grew just 10.8% yoy.
EBITDA margin, however, contracted 162bp for Nifty ex-financials,
impacted by sectors like auto, cement, construction, infrastructure, IT,
energy, pharmaceuticals and power utilities.
The key positives from 4QFY17 results could be listed as follows:
(a) The asset quality deterioration of financial
companies seems to have bottomed. The profit growth however remained skewed.
(b) Consumption growth is uneven. The urban
consumption seems to have picked up, while the rural consumption remained under
pressure, perhaps due to lower farm prices, higher agri input cost and
financial stress.
(c) The debt servicing capabilities of
beleaguered metal companies has shown improvement, led by better realization
and lower interest expense.
(d) The infra companies in select sectors like road
and power distribution & transmission, have shown healthy growth in order
book.
(e) After remaining stagnant for three years,
Nifty aggregate earnings recorded positive growth, though still in single
digit.
(f) Interest rates are showing an encouraging
trend.
The key negatives were:
(i) EBIDTA margins declined, showing complete
lack of pricing power and rise in input costs.
(ii) IT and Pharma sector continue to face pressure
both on pricing as well demand front.
(iii) Investment demand seems to be comatose for now.
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