Is Earnings Slowdown An Emerging Risk For D-Street? | Raamdeo Agrawal & Navneet Munot Share Insights

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인도 기업 이익 성장이 한 자릿수로 둔화되며 소비 둔화 우려 확대. 도시 소비(신발·의류·QSR·승용차) 둔화, 농촌 소비는 식품가격 상승·양호한 몬순·주정부 복지지출로 일부 회복 조짐. 이익 추정치가 연초 대비 하향 조정되고 시장 기대(15~20%)와 괴리. RBI는 단기 금리인하에 선을 긋고 인플레 4% 앙커링 중시. 금융권은 규제 강화로 무담보대출 등 성장 둔화. 전반적으로 구조적 성장 스토리는 유효하나 경기적 둔화로 해석, 기업 재무건전성은 양호.

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01. moving to another issue and typically when you're dealing with one you know it's like Murphy's Law and more things pile up and now suddenly we're dealing with a Slowdown in earnings this is the first time we're talking about single digit sort of earnings growth and now there's a big issue about consumer you know whether there's a bigger consumer slowdown in the making Ram G where do you stand on the way earnings are and whether this is just a temporary blip or whether this is something that concerning you it has to be temporary blp because we cannot go from 4 trillion to 8 10 trillion without consuming more soaps more milk more everything how mean consumption has to take place 60 65% of the econom is about consumption we'll need more car more motorcycle more bicycle everything we need more just that there adjustment phase postco you know all the rich guys they are buying so it's a cash sh recovery and uh I I I hope that it tickles down and private CeX picks up there lot of hopes but uh right now consumption is not looking to be very exciting now come in on this again this was one of the things that market will always give you what you don't expect right which is why the Market's the best teacher so the FBI FBI selling was one aspect and now suddenly the stock of urban consumption slow down your thoughts on what your seeing and hearing from from companies no so there's surely a moderation and growth in the uh Urban India from the base that we had earlier you look at Footwear apparels qsr passenger vehicles across the board you you can really feel it and I'm sure companies are telling you that companies are telling us that there seems to be some bit of uptick or at least early signs of uptick in the rural growth uh over the last couple of years everybody has been talking about a k shave recovery the premium products doing well but the the rural consumption is not doing well I think we are seeing some bit of reversal maybe the terms of trade are shifting with higher food price es uh which is like hurting let's say an urban consumer but probably benefiting a rural uh consumer who's more dependent on agre income better Monsoon and maybe welfare is spending we can discuss the separate aspect of that in the long run what it can do to macro stability but maybe the higher welfare spending by the state governments last 14 or 15 governments in last 6 month have announced some or the other scheme that money probably is helping uh the rural consumption so that's a brighter aspect but yeah I mean we are all concerned about the slow down in consumption 2/3 of our economy is consumption and if you have these numbers of single- Digit growth that that's definitely concerning that that's consumption that's one part of it but Ram G on earnings overall I mean I remember in our earlier conversations earlier this year uh you know you've been talking about uh reasonable expectation to have like 12 to 15% earnings compounding are we still on track with with that trajectory that is the main pain Point like uh at the beginning of the year my head of research told me uh RAM G we have done 1,000 this year and 1150 next year for sure it can only go up it cannot go down first quarter result he comes down to 1100 now this quarter result is not even out he's already at 1,70 I said where will you go up are you going to back to th000 so you know the pace of decline in the earnings is quite alarming and uh they estimate this is this for this quar is about just about 6 7% even if you see the business standard Aggregates it's just about 6 7% and uh so we are not seeing too many spots in the earning side uh and uh markets are at alltime high so you know there are two see Market is also dull dead 12 13 14 15 P that matches you know but right now Market expectations are running at more like 15 to 20% kind of earnings growth and here is a market which is kind of suppli is building up you know massive supplies building up and other side the earnings are disappointing so this is this is concerning but does the consumer need help there there's only two ways monetary or fiscal do we do we need to start to think about that he the guy tell but RBI has mentioned I think the governor has mentioned that we don't have the scope for rate cut in the in the near future they want to build the credibility of anchoring the inflation expectations around 4% which in the long Arc of thing is a good thing think about the way risk premiums can come down if you are able to build that credibility that your policy makers will ensure inflation India stays around 4% this is what US did in 8s and it benefited for four long Decades of ensuring a non-inflationary continued expansion and I era I think which India will also have uh from the fiscal perspective as I said that state governments are spending more on the welfare side but I think we need to have a right balance they also need to do the kex so the last three or four years or five years the central government has done the heavy lifting expecting that private sector will come in and state governments will also step up on their uh spending on the capex side that hasn't really happened to the extent that was expected and I think that will be one of the main trigger for the growth recovery because once you have that investment cycle kick in then you create the jobs then people have more incomes which they consume as well as save and then it gets converted into investment so you get into a virtual cycle just buying throwing more money into people's pocket to get growth for one or two quarters won't structurally help us you know one more aspect on the local issues and then we'll get to Global uh what's happening with bfsi and you know for the longest time that's been the sector that people are waiting to sort of see take off but what we realizing is that because the RBI is as prudent as it is uh we're seeing issues right now whether it's putting slamming the brakes on unsecured lending and or whether it's gold financing and that's showing up in the earnings of those entities as well so sir where where do you stand on what we are seeing these asset quality concern rise in slippages RBI action what are your thoughts when you're looking at financials now financials at least on lending side is pretty tough I mean regulator is coming heavily on them to control the rate of growth of then they're saying your credit deposit should be less than 100 and or 70 80 whatever so clearly there is a uh regulator doesn't want to go wrong in terms of uh excessive expansion of credit or maybe unhealthy credit they are seeing early signs of slippages so so lending side definitely looks to be uh kind of stuck in the sense that there's no uh there's no 20 25% growth kind of scenario and that was a sector which was leading the and that is the largest part of the index also and that's why private sector Banks if you see they were the growth back Warriors you know like they'll grow at 25% 22% that kind of thing so that has been because liability mobilization another controversy which slightly is dying down is the about money is coming to the stock market and H banks are not getting enough money so I think maybe n has a better Market comes off a little bit that problem people not buing absolutely absolutely think cannot impact the bank deposit growth has explained and has been debated and I think been put to exactly it's been put to rest yeah but but then what that also tells us is that if you're expecting growth and sort of the driving engine to be consumer that's not the case if you're expecting financials to do that heavy lifting that's not going to be the case so then then what do we look out to I mean not not that by the way I mean it's it's let's say the expectations were very high relative to what we are delivering now I I would put it more that it's a cyclical slowdown than something very structural all the structural story that we've been talking for last several years the reforms that have happened the investment we are making an infrastructure be physical digital and then social infrastructure everything else that we have done I think that will play out the way it was envisage we are going through maybe a period of cyclical slowdown but I I remain optimistic on the on the long one of the thing one of the thing that what we are discussing today and you you talked about the valuation relative to 2007 and 2021 one the thing you need to keep in mind that this time what we are discussing is an earning slowdown but the balance sheets are in a great shap R tell me relative to any period that we have seen in any bull market this time balance sheets of both the corporate India as well as the banking sector financial sector the government sector there's a small part of I would say household sector which has got overleveraged maybe some of the unsecured personal loans ET the RB is trying to solve exactly and and you have to give credit to our our Regulators how conservative and how prudent they are