HDFC Securities: India Equity Strategy - Quarterly Flipbook: Q1 - Margins Save The Day

HDFC Securities Report

Q1 FY21 was indeed an exceptional quarter, given the impact of Covid-19 induced lockdown, which tested the resilience and agility of business models.

As we are nearing the end of reporting season, it has turned out to be a satisfactory one versus the heightened fears and muted expectations.

Key highlights of the quarter:

1. Margins beat estimates across multiple sectors such as information technology, cement, pharma, staples due to (a) sharp cost-cutting initiatives leading to lower selling, general and administrative expenses (advertising and promotion, travel expenses, etc.) and (b) improved pricing power in the wake of lower competition;

2. Positive management commentaries on June/July exit run-rate of revenues as unlocking led to sharp demand rebound in multiple sectors, viz., staples, paints, select autos, cement, insurance, IT, metals, energy;

3. Continued market share gains for the larger companies versus smaller players and those from the unorganised sector during Q1;

4. Improving moratorium trends for lenders;

5. Sharp uptick in capital markets activity leading to strong performance for brokers and exchanges while asset management companies results were subdued.

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