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BQEdge | Why An Earnings Boost May Not Be Enough For RBL Bank’s Stock  

Caterpillar’s Q4 Earnings Per Share stood at $2.55 compared to the Bloomberg consensus estimate of $2.99.

An RBL Bank signboard in Mumbai, India. (Source: Aditya Mehrotra/ BloombergQuint)
An RBL Bank signboard in Mumbai, India. (Source: Aditya Mehrotra/ BloombergQuint)

BQEdge is specially curated for BQBlue subscribers. Every day this note will offer special equity market and stock-specific insights and flag select emerging trends in the tricky-to-trade derivatives market.

On Today’s Edition:

  • Why earnings may not be enough to boost RBL Bank stock's fortunes.
  • Tough news from across the Atlantic for Balkrishna Industries.

Watch | What RBL Bank Charts Suggest

Tough News From Across The Atlantic For Balkrishna Industries

U.S.-based Caterpillar Inc. reported a muted fourth quarter financial performance, hit by an economic slowdown in China as well as rising input costs. The construction and mining equipment maker, widely considered a bellwether for the global industrial economy, reported the biggest quarterly profit miss since at least the beginning of 2008.

Caterpillar’s fourth quarter earnings per share stood at $2.55 compared to the Bloomberg consensus estimate of $2.99. Also, the company’s 2019 profit forecast range, at the low end, was below the average of analysts’ expectations as per Bloomberg.

The company’s shares plunged in the fourth quarter on concerns of a slowdown in demand.

This does not bode well for Balkrishna Industries Ltd., a maker of off-highway tyres which cater to agriculture, industrial and mining sectors. The U.S. contributes 18 percent to Balkrishna’s topline, whereas Europe contributes 52 percent, according to company data disclosed in the second quarter.

Balkrishna is a key supplier to Capterpillar and recently invested $100 million in the U.S. to increase capacity to 20,000 MT pa. Softening of demand from key clients like Caterpillar will pose a hurdle forBalkrishna Industries to meet its 210,000 – 220,000 MT volume guidance for FY19. The tyre maker hadachieved 109,093 MT by end of the first half of FY19, according to its investor presentation.

Opinion
The Upside of Caterpillar’s Bleak Results