Key Points
We remain constructive on banking and financial services because at some point of time as the rate cut starts happening at the end of this calendar year, a strong tailwind should start coming back in the second half of the next year's earnings as well.. Joshi further says from among the pack, Adani Ports, ACC and Ambuja, can probably be bought on any decline...
Also, from an overall corporate debt perspective, we are around 0.5 times which is at a decadal low for corporate India as far as the debt levels are concerned and even within the banking system, the kind of net NPAs that are now present in the system gives hope that earnings should continue to be on a very strong footing for the remainder of this year as well.. Unlock Leadership Excellence with a Range of CXO CoursesOffering CollegeCourseWebsiteIndian School of BusinessISB Chief Digital OfficerVisitIIM LucknowIIML Chief Executive Officer ProgrammeVisitIIM LucknowIIML Chief Operations Officer ProgrammeVisit..
So, the base case scenario that is probably getting built in for a 12% to 15% earnings growth might very well continue. Obviously, the next quarter when elections will probably start and the order of elections will start happening, the expectations in terms of order flows for the capital goods industry probably might get a little patchy, but the expectations for the next financial year remains very robust along with the macro numbers that the exchequer has also given in terms of both the GDP estimates as well as expectations of a lower fiscal deficit...
Adani Ports, for example, where the expectation largely is a large part of the mechanisation that has already been part and parcel of their operations should continue growing at a very good clip and with expectations of global trade normalising, albeit the Red Sea crisis that you probably see might have an issue for a quarter or so, but it should normalise over the next few quarters and improve thereafter, giving sustainable growth in terms of the number of volumes of the containers that they will probably handle.. So, to that extent, the kind of numbers that can come through from Adani Ports can still be better every passing year..
My take is that with more orders coming their way, better execution of these orders, better margins at which these orders are coming through, leverage is not that much for most balance sheets within the space itself and a lot of players are monetising a large part of their assets as they are fructifying to a close, which probably also alleviates a lot of the equity investments required for the other projects, working capital requirements as well as excessive amount of debt onto their books..
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