Third Quarter Earnings Not as Hard Hit by Note Ban as Expected

There are yet many firms, however, who have not announced their earning for the quarter yet.

Corporate earnings for the third quarter are not as hard hit by demonetisation as was expected, according to a report by Livemint.

Of all the firms that reported their financial results for three months till 23 December, over 58 percent exceeded or met the estimates of the analysts. The report goes ahead to point out that an analysis shows that 55 out of 94 of the BSE500 companies, which include names like UltraTech Cement Ltd, ITC Ltd and Biotechnology firm Biocon Ltd, have met or beat estimates.

The ratio is similar to that of the September quarter when once again 58 percent companies met or beat estimates, the Livemint added.

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Commenting on the numbers, Gautam Chhaochharia, head of research at UBS Securities India Pvt Ltd, said:

Compared to pessimistic expectations and worries, the earnings have been a respite. The numbers suggest the impact of demonetisation was not that significant as earlier perceived.

The report also points out that since the analysts had no precedence to use as an index for the demonetisation of an economy on a scale as massive as India’s, it was difficult for analysts to work out the estimates.

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Following the announcement of demonetisation on 8 December, consumer-centric businesses were the most hard-hit. However, while the note ban may have destabilised the economy, analysts still expect the growth rate to be faster than usual during the upcoming fiscal year.

Additionally, the reports also point out that there are yet many firms who have not announced their earning for the quarter. Results might vary once they reveal their numbers too.

Demonetisation has also increased the anticipation for Union Budget 2017. Speaking about the budget, Dhananjay Sinha, head of research at Emkay Global Financial Services Ltd, said:

Sales growth is flat, and I think this trend will continue for a quarter or so. The budget will be critical and it is likely to be an expansionary budget with stimulus package to make up for demonetisation.

(With inputs from Livemint)

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