D-St bulls have little to chew on: Earnings growth revival looks tough

Don't hold your breath. After the recently concluded June quarter, the fiscal-year earnings per share growth estimate for companies in BSE 100 has been pared by 4 percentage points to 11%, according to Credit Suisse estimates collated from IBES (a unit of Thomson Reuters).

The extent of downgrade was sharper than the 1-2 percentage point reduction in the preceding two quarters. Also uncertain is the FY19 growth estimate of 23%, according to IBES, which is too optimistic, according to some analysts. The FY18 earnings growth estimate is now lower than the previous fiscal's actual growth. For a sample of 1,318 companies, profit rose 16% in FY17 compared with a 3% drop in previous year.



In addition, the forecast of 12%blended earnings growth of India Inc for the four quarters starting July 1 is among the lowest in emerging markets, better than only Russia and South Africa, according to data compiled by MSCI.On the positive side, the appreciating rupee has improved dollar-denominated earnings growth to 16% year-to-date, attracting marquee investors such as Mark Mobius. The strength of projected earnings growth is pivotal since stock valuations are soaring based on the assumption of future recovery.