Q1 earnings: Worst Indian profits in a decade are beating analyst estimates

Q1 earnings: Worst Indian profits in a decade are beating analyst estimates
By Ishika Mookerjee

You wouldn’t expect analysts to draw comfort when a nation’s top companies post the worst profit decline in at least 10 years. The pandemic has made that a reality in India.

While aggregate net income of 47 NSE Nifty 50 Index members slumped 40% in the quarter ended June from a year ago, nearly two thirds of these companies met or exceeded estimates, data compiled by Bloomberg show. For analysts struggling to justify the stock market’s rebound since March, that passes for good news.

“To be honest, we had written off this quarter,” said Abhimanyu Sofat, head of research at IIFL Securities Ltd. “But majority of the Nifty companies have come with better-than-expected results.”

Bloomberg

Like in other major markets, earnings in India weren’t as bad as feared as companies slashed costs to save cash, with a reduction in estimates ahead of the results season also making it easier to beat them. Analysts have cut the 12-month average profit estimates for Nifty members by 20% since January on concerns about a patchy recovery and climbing virus numbers.

“Even if things improve in the remaining quarters, full year FY21 will look flattish at best, with risks tilted toward the downside” because of rising virus cases and some states battling a second wave of lockdowns, said Gautam Duggad, head of research at Motilal Oswal Securities Ltd. in Mumbai.

Still, not everyone is putting emphasis on past performance. Some brokers have switched to publishing two-year price targets to eliminate the short-term noise in their research. Optimists say the market has priced in a broad-based earnings recovery to begin in the fiscal year starting next April.

READ  On Anime Day, Gil do Vigor encourages students and reminds them of where their studies have taken them: Doctorate in America | tv and famous

“Corporate earnings will recover in 2022, and the market is looking at that is my sense,” said Sumeet Rohra, a fund manager at Smartsun Capital Pte in Singapore. “Pockets of the market have huge potential.”

CHart 2Bloomberg

Only three Nifty 50 companies including Coal India Ltd., Oil & Natural Gas Corp. and Zee Entertainment Enterprises Ltd. have yet to report results. The regulator has extended the timeline for reporting June-quarter earnings till Sept. 15 amid the pandemic.

Key Highlights

  • Four of India’s five biggest technology companies joined their global peers in beating earnings forecasts amid rising tech demand, spurring the biggest earnings upgrades for the sector since 2013
  • Consumer staples producers posted the biggest leap in earnings, with Britannia Industries Ltd. posting 117% growth on an adjusted basis
  • Most banks reported declines in profits as they continued to bolster buffers against the pandemic. Profit at State Bank of India, the nation’s largest, was helped by sale of stake in its insurance unit
  • Communication services, consumer discretionary and industrials posted the steepest declines on an adjusted basis
  • Automakers took a hit. Top carmaker Maruti Suzuki India Ltd. posted its first quarterly loss on record as the lockdown stopped people from visiting showrooms

Analyst Comments

  • Analysts expect software exporters and drugmakers to continue to report strong earnings for the year ending in March, backed by solid demand and cost-savings from remote-working arrangements
  • Rural economies are recovering rapidly because of the government’s initiatives to boost incomes in the villages, said Deven Choksey, who oversees investment and research as managing director at KRChoksey Investment Managers Pvt
  • Most companies got “significant cost advantages because of working from home and that cost saving is going to be a permanent feature going forward”
  • Based on both earnings growth expectations and valuations, “we like banks, capital goods, cement, electric utilities, gas utilities, technology, oil marketing companies and telecom sectors,” said Rusmik Oza, head of fundamental research at Kotak Securities Ltd.
READ  Macron proposes to Biden for agreement in disputed Airbus-Boeing - 02/10/2021

–With assistance from Renu Bhadresha, Jiwon Yeom, Nupur Acharya, Abhishek Vishnoi, Paresh Jatakia and Suvashree Ghosh.

// Creating Elements for IE : HTML 5 and cross domain checks (function () var elem = ["article", "aside", "figure", "footer", "figcaption", "header", "nav", "section", "time"]; for(var i=0; i<=elem.length-1; i++) document.createElement(elem[i]) var hd = 'indiatimes.com', dd = document.domain,intv,intv2,fo; if (dd != hd && dd.indexOf(hd) != -1) document.domain = hd )(); var intv,intv2;var fo; if(subsec1_value == '1715249553' && subsec2_value == '1052732854') subsec1_value = newHookId = '1052732854'; // politicsnation else if(subsec1_value == '1715249553' && subsec2_value == '1373380680') subsec1_value = newHookId = '1373380680'; // Economy var _gaq = _gaq || []; var customDimension = customDimension || ; var analytics_js_path="https://www.google-analytics.com/analytics.js"; (function(i,s,o,g,r,a,m)i['GoogleAnalyticsObject']=r;i[r]=i[r])(window,document,'script',analytics_js_path,'ga'); var gaProperty = 'UA-198011-5'; var disableStr="ga-disable"; if (document.cookie.indexOf(disableStr + '=true') > -1) window[disableStr + '-' + gaProperty] = true;

ga('set', 'anonymizeIp', true); ga('create', gaProperty, 'auto', 'allowLinker': true); ga('require', 'linker'); ga('linker:autoLink', ['economictimes.com']); ga('require', 'displayfeatures'); window.optimizely = window.optimizely || []; window.optimizely.push("activateUniversalAnalytics"); ga('require', 'GTM-KS2SX8K');

customDimension.dimension1 = "ET Free"; customDimension.dimension4 = "Bloomberg";

customDimension.dimension6 = "Native - 77557972"; customDimension.dimension8 = "Aug 15, 2020"; customDimension.dimension9 = "Stocks";

customDimension.dimension12 = "Q1 earnings,Motilal Oswal Securities Ltd.,Coal India,smartsun capital pte,Britannia Industries Ltd,maruti suzuki india ltd,Kotak Securities Ltd.,Zee Entertainment Enterprises Ltd"; customDimension.dimension13 = "09:33 AM IST";

customDimension.dimension15 = "No"; customDimension.dimension16 = "No";

(function () ; if(a.beforeSyft) customDimension.dimension32 = a.beforeSyft;

if(a.afterSyft) customDimension.dimension33 = a.afterSyft;

)()

var contentAge="0.11494212962962963"; if(contentAge) customDimension.dimension34 = contentAge > 2 ? '>48hs':'<48hrs'; customDimension.dimension25 = "articleshow_main"; customDimension.dimension26 = "Markets"; customDimension.dimension27 = "Markets/Stocks/Earnings/"; customDimension.dimension29 = "1977021501"; customDimension.dimension48 = "77557972"; ga('send', 'pageview', customDimension); ga('create', 'UA-5594188-55', 'auto','ETPTracker'); //ETPrime GA var newHookId ='1977021501'; var newHookId2 = '2146842'; if(newHookId == '1715249553' && newHookId2 == '1052732854') newHookId = '1052732854'; // politicsnation else if(newHookId == '1715249553' && newHookId2 == '1373380680') newHookId = '1373380680'; // Economy var subsec1_value="1977021501"; var subsec1_2value="2146842"; if(subsec1_value == '1715249553' && subsec1_2value == '1052732854') subsec1_value="1052732854"; // politicsnation else if(subsec1_value == '1715249553' && subsec1_2value == '1373380680') subsec1_value="1373380680"; // Economy (function (g, r, o, w, t, h, rx) , h = r.createElement(o), rx = r.getElementsByTagName(o)[0]; h.async = 1;h.src = w;rx.parentNode.insertBefore(h, rx) )(window, document, 'script', 'https://static.growthrx.in/js/v2/web-sdk.js', 'grx'); grx('init', 'gf999c70d'); var grxDimension = url: window.location.href, title : document.title, referral_url : document.referrer; if(window.customDimension && window.objDim) for(key in customDimension) var dimId = 'd' + key.substr(9, key.length); if(objDim[dimId] && customDimension[key]) grxDimension[objDim[dimId]] = customDimension[key]; console.log('grxDimension', grxDimension); var subsStatus="Free User"; var jData = JSON.parse(localStorage.getItem('jStorage')); function getCookie(n) var ne = n + "=", ca = document.cookie.split(';');for (var i=0;i< ca.length;i++) var c = ca[i]; while (c.charAt(0) == ' ') c = c.substring(1, c.length); if (c.indexOf(ne) == 0) return c.substring(ne.length, c.length); return null; (function () if(ssoid = getCookie('ssoid')) try catch (e) else grxDimension['user_login_status'] = 'NONLOGGEDIN'; grxDimension['user_subscription_status'] = subsStatus; )() grx('track', 'page_view', grxDimension); if(geolocation && geolocation != 5 && (typeof skip == 'undefined' || typeof skip.fbevents == 'undefined')) !function(f,b,e,v,n,t,s) if(f.fbq)return;n=f.fbq=function()n.callMethod? n.callMethod.apply(n,arguments):n.queue.push(arguments); if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0'; n.queue=[];t=b.createElement(e);t.async=!0; t.src=v;s=b.getElementsByTagName(e)[0]; s.parentNode.insertBefore(t,s)(window, document,'script', 'https://connect.facebook.net/en_US/fbevents.js'); fbq('init', '338698809636220'); fbq('track', 'PageView'); var _comscore = _comscore || []; _comscore.push( c1: "2", c2: "6036484"); if(geolocation && geolocation != 5) (function() var s = document.createElement('script'), el = document.getElementsByTagName("script")[0]; s.async = true; s.src = (document.location.protocol == "https:" ? "https://sb" : "http://b") + ".scorecardresearch.com/beacon.js"; el.parentNode.insertBefore(s, el); )(); if(geolocation && geolocation != 5) (function() function pingIbeat() window._pg_endpt=(new Date()).getTime(); var e = document.createElement('script'); e.setAttribute('language', 'javascript'); e.setAttribute('type', 'text/javascript'); e.setAttribute('src', "https://agi-static.indiatimes.com/cms-common/ibeat.min.js"); document.head.appendChild(e); if(typeof window.addEventListener == 'function') window.addEventListener("load", pingIbeat, false); else var oldonload = window.onload; window.onload = (typeof window.onload != 'function') ? pingIbeat : function() oldonload(); pingIbeat(); ; )();

About the author: Sarah Gracie

"Proud social media buff. Unapologetic web scholar. Internet guru. Lifelong music junkie. Travel specialist."

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *