Heckyl news study has indicated a rise in Sensex companies’ aggregate revenues for the third quarter of the financial year 2018. Heckyl has developed an indicator to measure Sensex companies’ revenue visibility through analysis of growth-oriented news flow for the quarter. Our analysis showed that the movement in growth-oriented news flow and its underlying sentiment for the particular quarter can accordingly move Sensex companies’ aggregate revenues in the subsequent quarter.
We have analyzed nearly 60,000 growth-oriented news items for Sensex companies for the past 10-quarters. We identified 15 growth-oriented news categories which can have the potential impact on the company’s future revenue growth. Some of the growth-oriented news categories are contracts, expansion, product launch, M&A, fund-raising and business transactions. Based on the news volume and sentiment for these growth-oriented categories, we have prepared Heckyl Company Growth Indicator for Sensex companies.
Our back-testing has shown a strong positive 1-quarter lead-lag correlation (0.79) between Heckyl Company Growth Indicator (leading indicator) and aggregate quarterly net sales (lagging indicator) for Sensex companies for September 2015 to September 2017 period. In other words, Heckyl Growth Indicator for September 2017 quarter can act as a leading indicator for Sensex companies’ aggregate net sales for December 2017 quarter.
Heckyl Company Growth Indicator has correctly predicted the trend for Sensex companies’ aggregate net sales for the past 6 out of 7 quarters (Chart 1).
For September 2017 quarter, Heckyl Company Growth Indicator stood at 3.10, up from 3.03 for the preceding quarter. A further rise in Heckyl Company Growth Indicator during the second quarter (Point 7 highlighted chart 1) indicates that the momentum in revenue growth for Sensex companies likely to maintain for the December 2017 quarter. However, a decline in Heckyl Company Growth Indicator during December 2017 quarter (Point 8 highlighted in chart 1) showed that Sensex companies’ aggregate revenues may fall in March 2018 quarter on a sequential basis.
In our view, such deep-dive analytics on news data can capture corporate growth activities and its underlying sentiment. Most importantly, this can help in predicting likely revenue growth for both the index companies and the sector.
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