Thinkpad: Earnings, Elections And A Memory

Happy Sunday.

This week’s Thinkpad is a platter. A mix of what’s happening, what’s in store over the next few weeks, and a look back. A cheese and olives platter, if you may.

Let’s start with what’s happening. Earnings. We got a few big numbers this week and we continue to sift through the minutiae to dig out underlying economic commentary.

The season’s grinch (no offence intended) so far has been Larsen & Toubro. Depressive commentary coming from the company. Order inflow during the July-September quarter was down 42% over a year ago. Management said any orders coming in are from government agencies and they don’t see meaningful private capex for the next two years.

Not everyone sounded that down and out. Maruti Suzuki reported a 10% increase in revenue over a year ago and a 15% increase in volume of cars sold. They’re keeping their fingers crossed for a good festive season. Will lenders play ball?

Over at Titan, total revenue was down 3% but jewelry sales were up 8% over a year ago, despite higher gold prices. The management said it is hopeful of a strong festive and wedding season. But hope it is. Because at an aggregate level, festive season gold sales are seen at their weakest since 2008.

As for the private banks, their earnings are bubble-wrapped right now, thanks to the Reserve Bank of India.

Finally, the ecosystem that is Reliance Industries saw quarterly revenues decline due to weak demand for fuel and low refining margins. Retail and telecom provided a buffer. But there were other interesting takeaways, including how one unit of RIL is benefiting from supply chain disruptions. Sajeet Manghat explains in BQ’s running Editor’s Take on earnings.

From earnings onto elections, both local and global.

The first phase of the Bihar elections kicked off this week. BloombergQuint has an interesting array of articles that you may want to read.

Shankkar Aiyar writes on the ‘State Of Bihar And Why It Matters’. Shaibal Gupta on the fact that the elections are no longer ‘Bipolar or Predictable’. And Amitabh Tiwari on the key stats you may want to watch if you are tracking the polls.

But the election the world is bracing for is the U.S. Presidential contest. We’ll simply point you to BloombergQuint’s U.S. election page to catch up on Bloomberg’s best reads before the mayhem begins.

Which brings me to memories. Remember what was happening the last time a new U.S. president was elected? We’ll make this personal and tell you what we were doing.

The small team at start-up BQ was in office, planning some routine analysis of the implication of the U.S. election for India. News came that Prime Minister Modi will address the nation. We assumed the address was on national security. We stuck around just to listen in but our bags were packed and we were ready to call it a day right after the speech.

Then came demonetisation. The U.S. elections were forgotten. A Trump verdict mostly ignored. Going home pushed back by many hours. ‘WHAT JUST HIT US’ was the general mood. The experience of an economy, the size of India, seeing 86% of its currency in circulation wiped out, will forever be one-of-a-kind.

It’ll be four years since demonetisation in a week. Just as a new (or old) U.S. President gets elected. What changed after demonetisation?

Cash as a share of GDP remains mostly undented. This year it will rise both because of precautionary savings and a drop in GDP. Digital payments, which may have seen some impetus post demonetisation, got a far bigger boost from a pandemic than a self-induced cash shortage. As for the debate over the ‘black economy’, who knows if anything has really changed. Much pain for little gain?

We’ll leave it there. Rustle up some cheese and olives and enjoy the rest of the weekend.