CLSA sees adverse impact of Kerala floods on select companies

MUMBAI: CLSA said select companies could see adverse impact in the September quarter results due to impact of the Kerala floods.

The firm said it does not see meaningful adverse impact on broader corporate results for the September quarter.


"Some companies that would be impacted include general insurance companies, select cement companies (like Ramco/India Cements), auto companies (viz, Eicher and Maruti) and jewellery companies (like Titan). Production of rubber and copra may be impacted, with a possible small impact on Marico," said CLSA.

With limited presence of corporate head offices or manufacturing units in the state, the impact of Kerala floods would be felt more by way of consumption, said CLSA.

The firm said that the timing of the floods is particularly bad from a seasonality perspective, as Kerala’s main annual festival period of Onam is scheduled over 24 August – 4 September, which could result in weaker sales for consumer durable companies, including auto.

"Kerala is an important market for Eicher (11%), Maruti (8%) and Ashok (4%). Also, the second quarter contributed 29-33% of 2-Ws and PV sales in FY18, corresponding with the Onam festival," said CLSA.

The firm said cement companies Ramco Cements and India Cements, which are both based in South India, could see a near-term demand slowdown. "Reconstruction efforts later though could make up for the temporary demand loss," said CLSA.

Ten percent of Sun TV Networks' revenues are attributable to Kerala, said CLSA.