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Q2FY2020 results preview

Sobering quarter, yet again

  • Corporate earnings are likely to remain sober in Q2FY2020 too - Headline aggregate earnings are likely to decline by 5.7% for Sensex companies.
  • Earnings are likely to be skewed, with a few sectors - FMCG, financials – mainly a few private banks and some NBFCs doing the heavy-lifting for aggregate earnings.
  • One-offs affecting bottomline - impairment on DTA, write-backs of Q1FY20 tax, positive effect of a lower tax rate, etc could keep earnings volatile.

Despite continued disappointment on the earnings growth front, downside risks could be limited from current levels - Sensex trades at ~16.8x consensus earnings of FY2021E, near its long-term average.

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