THE HINDU Editorial -Vocabulary- NOVEMBER 8 , 2017

Corporate earnings show a mild recovery, but valuations remain a major concern

India Inc.’s earnings performance for the second quarter of the financial year has turned out to be largely in line with street expectations. Both revenue and profits, when compared to the results reported for the first quarter ending June, have shown signs of improvement that suggest a slow but steady pick-up in demand in the wider economy. This is comforting news for many who feared that the twin shocks of demonetization and the hasty implementation of the GST would have significant medium to long-term effects on the economy. The quick rebound in the earnings of corporate India, however, should not come as too much of a surprise. Both demonetization and the introduction of the GST, while definitely disruptive, are transitory in terms of their economic impact. It is also worth noting that most analysts had revised their earnings estimates downwards in the wake of the rapid policy changes. Such moderation in expectations too has probably played a part in making the earnings performance look better. However, the financials of many companies are yet to fully recover to match their performance prior to demonetization. This is striking in sectors such as microfinance and housing finance, where companies have struggled to revive their loan book and disbursements growth rates, also in companies dependent on consumer demand. Many have clocked profit growth through cost-cutting rather than superior revenues.

Going forward, however, a return to largely normal earnings growth is more likely than not as the wider economy returns to normal under a more stable policy climate. None of this is to deny the expensive valuations at which Indian stocks are currently priced by jubilant investors. The market, which has been hitting new highs every passing week, has not cared much about the lack of sufficient earnings growth. It has been generous in offering sky-high prices to initial public offerings, and now trades at a historically expensive price to earnings ratio, calculated based on trailing earnings, of well over 24. The tightening of liquidity by major central banks like the U.S. Federal Reserve has not dampened its spirits either. Domestic mutual funds have been more than able to fill the gap left by foreign investors, thanks to a surge in retail investors putting in money through monthly plans. The Centre’s recent initiatives to ramp up spending in the economy by reviving credit growth and public infrastructure spending could yield some positive results, but will take time to materialize. Visibility on the time horizon for a full-blown and sustainable  uptick in corporate earnings remains as hazy as the smog that is engulfing the capital where policy-makers are fire-fighting on GST. A swift and tactful unraveling of the GST tangles could, in fact, be the quickest fillip for reviving consumption and investment.

                       

1. VALUATIONS < Va /lu /ae / sn/s>

 Noun

 Meaningà the act of placing a value on the nature, character, or quality of something

 Synà  assessment, estimation, evaluation ,reckoning, estimate

 Exampleà" "it is wise to obtain an independent valuation"

 Antonymà  assessment

2. IMPLEMENTATION  <Im /pli /men /tae /sh /n >

 Noun

 Meaningà the process of putting a decision or plan into effect; execution.

Synàexecution, application ,carrying out, performance, carrying through

Antonym-à  ignore, 

 Exampleà "she was responsible for the implementation of the plan"

3. DISBURSEMENTS  < Dis /b/s/ment>

 Noun

 Meaningà the act of paying out money especially from a fund

 Synà  payment, giving, paying, remitment, remittance,remuneration

Antonymsà nonpayment

Exampleà “substantial disbursements for research and development

4. JUBILANT  < Ju /bli /ent>

 adjective

 Meaningà feeling or expressing great happiness and triumph.

Synà overjoyed, exultant, triumphant,joyful,rejoicing.
 Antonymsà   dejected

 Exampleà" a large number of jubilant fans ran on to the pitch"

5. DAMPENED <Dam /pen/d  >

Verb-past tense

SynàLessen, decrease, diminish ,reduce ,lower
 Meaning à make less strong or intense

Exampleà  "nothing could dampen her enthusiasm".

6. INFRASTRUCTURE  < In/fra /st /k/chr>

Noun

Meaning à the basic physical and organizational structures and facilities (e.g. buildings, roads, power supplies) needed for the operation of a society or enterprise. Synàarchitecture, armature, cadre, configuration, edifice

Antonymà under developed

 Exampleà "refusal to recognize the legitimacy of both governments"

7. HORIZON  <ho/rai/zn >

Noun

Meaningà the limit of a person's knowledge, experience, or interest.

Exampleà "she wanted to leave home and broaden her horizons”

Synà  range of experience ,outlook ,perspective, scope, perception

Antonymsàno  boundary ,limitless

8. SUSTAINABLE <Sus /taen /ae/bl >

Adjective

Meaning à being a method of using a resource so that the resource is not depleted

Exampleàsustainable techniques

Antonymsà out of control

9. UPTICK<Up /tick >

Noun

Meaningà  a small increase or slight upward trend.

Synà
Exampleà"an uptick in foreign tourism"

Antonymsà  decline,

10. FILLIP <fee /lee /p  >

Noun

Meaningà something which acts as a stimulus or boost to an activity.

Exampleà "an uptick in foreign tourism"

Synà Stimulus ,  inducement , boost ,encouragement, impetus
antonym à burn out