Nifty 50 Earnings – Q1 FY 2020 – Analysis

As of 13th August, 2019, all the nifty companies have reported their earnings for the June quarter. Once again the Nifty 50 earnings have disappointed the market. On year-on-year basis (from Q1 FY 2019 to Q1 FY 2020), Nifty 50 earnings have fallen close to 8%.

Current PE Valuation of the Nifty 50 = 27.33 (19th August, 2019)

In the Apr-June quarter, economy grew at the slowest pace. Erratic monsoon, liquidity crunch in the financial space have added to uncertainty. Major sectors of the economy like auto (and auto ancillaries), consumer discretionary and FMCG have witnessed major demand slowdown during the period.

According to SIAM, the Indian automobile industry’s overall domestic sales fell 12.34% to 19,97,952 units in June 2019 as compared to 22,79,186 units sold in June 2018.

According to the Nielsen report, the FMCG growth trend was affected due to the fall in volume growth, which has moved 3.6% points lower, to 6.2% in June 2019 from 9.9% in March 2019.

Companies on Demand Slowdown:

·        Hindustan Unilever has warned demand will “remain subdued given macroeconomic conditions”.

·        Larsen & Toubro chairman AM Naik cited concerns about tightening economic conditions, and said the “situation is challenging”

·        HDFC Chairman Deepak Parekh said there has been a “distinct slowdown”

Nifty 50 Earnings – Q1 FY 2020