A roadside vendor counts Indian rupee notes at Sitabuldi market in Nagpur, India. (Photographer: Dhiraj Singh/Bloomberg)

Citi Pegs FY19 Earnings Growth At 20% With Downside Risks

India Inc. is likely to clock an earnings growth rate of around 20 percent in the current financial year, with a potential for downward revision, according to Citigroup.

Corporate earnings have been muted over the last four years. “We have considered it and so our estimates are below consensus,” Surendra Goyal, head of India equity research at Citigroup, told BloombergQuint, adding that the current 23 percent consensus estimate looks a bit too optimistic.

Citi’s expectation of fourth-quarter earnings is also not that great either. The firm expects a 10 percent growth in earnings for the three-month period, compared to a robust 20 percent plus year-ago. "But the numbers are not weak as they are coming off a decent base," Goyal added.

The Sectors Expected To Do Well In Q4

  • Energy
  • Domestic automakers
  • Metals and mining
Domestic autos, except JLR, saw decent growth in sales. The rural sentiment is picking up. This should help earnings.
Surendra Goyal- Head of India equity research, Citigroup

The Sectors That May Lag

  • Financials
  • Pharmaceuticals
  • Telecom

Sector-wise Performance Outlook

IT Sector

  • Infosys Ltd. can guide to around 5.5-7.5 percent revenue growth in constant currency terms.
  • HCL Technologies Ltd. could potentially guide to 7.5-9.5 percent year-on-year revenue growth in constant currency terms.
  • Reported numbers could look better due to cross currency impact on revenues/margins.
We expect L&T Infotech and Mindtree from the mid-caps to report decent growth this quarter as well.
Surendra Goyal- Head of India equity research, Citigroup


  • Expect higher credit costs due to the Reserve Bank of India’s new stressed asset framework.
  • Expect private banks/non-banking financial companies to continue to deliver healthy loan growth.
If you look at corporate banks or NBFCs, that growth is very much on track.
Manish Shukla, Vice President- Citi India


  • Expect a sharp surge in earnings before interest, tax, depreciation, amortisation per tonne for steel.
  • Earnings before interest, tax, depreciation and amortisation improvement for aluminum companies could be hurt by cost inflation.
  • Expect strong Ebitda improvement in Coal India Ltd. on high e-auction prices and fuel supply agreement price hike.


Tamiflu could be one of the big growth drivers for Cadila. There was a shortage of the drug in the U.S. Cadila would have benefitted from it and that will have a disproportionate impact on numbers this quarter.
Prashant Nair- Deputy Head- Research, Citi India


  • Topline expected to decline for the seventh straight quarter.
  • Commentary from managements on pricing trends and average revenue per user would be key to watch.

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