Earnings season holds out sliver of hope
- Day after Rahul Gandhi slams PM Modi, Amit Shah condemns politics over surgical strikes
- Prohibition to stay in Bihar: SC stays Patna HC judgment setting aside liquor ban
- US says does not support declaring Pakistan a 'terrorist state'
- Talk on stage at Parrikar event: 200 killed, atom bomb vs atom bomb
- Hurricane Matthew: Haiti death toll rises to 339, deadly storm hits Florida
Continuing challenges on the broader macroeconomic front nothwithstanding, the latest results season covering the performance of companies during the second quarter of the current fiscal has brought in some much needed cheer for investors.
Buoyed by a perceptible easing of the margin pressure, especially on account lower raw material prices and declining forex losses, companies have largely done better than during the first quarter. While topline growth has been sluggish, both profits and margins have perked up, prompting analysts to suggest that the corporate downturn could have bottomed out and a rebound is likely in the coming quarters, especially with an interest rate cut round the corner.
For 742 manufacturing and services companies (excluding oil firms) that issued their results till November 15, the overall year-on-year EBITDA margin has expanded by 14 bps (basis points, one bps being one-hundredth of a percentage point), after a decline of nearly 100-150 bps in previous quarters, according to CRISIL's latest results update for Q2 FY'13. Notably, small-cap companies, despite a tepid 7 per cent Y-o-Y revenue growth, have reported a sharp 114 bps improvement in margins compared to a decline of 12 bps reported for large-cap companies. Strong performance by sectors like cement, pharmaceuticals, textiles, agricultural commodities and media, which have a greater share in small-cap universe, have contributed to the perceptible uptick in margins.
Large-caps that delivered above estimates included Maruti, Bajaj Auto, Dr Reddy's, IDFC, Sun Pharma, Zee Entertainment, NTPC Ltd, L&T, HCL Tech and ICICI Bank, with a number of sectors defying the subdued sales trend that was visible across most sectors. Those that disappointed in earnings included Tata Steel, SAIL, Cairn India, Tata Motors, PNB and ONGC.
A sectoral snapshot would provide greater insight into the companies that did well and the specific reasons for the uptick in the reported numbers.
- Revealing Elena Ferrante’s identity violates her desire for privacy
- Breakdown of LoC ceasefire will make it difficult for army to control infiltration
- Academic publishers suit shows how much they benefitted from intellectual commons
- Lack of unity has prevented Sindhi nationalists from pressuring Islamabad
- India must be prepared to deal with a disease that is growing globally
- Challenge for India’s leaders is to show that strength can be blended with subtlety & deftness