A scorecard is seen on the main score board during a Test match. (Photographer: Jack Atley/Bloomberg News)

Q4 Nifty Earnings: The Second-Best In Five Quarters So Far

Most of the Nifty 50 companies either met or surpassed estimates halfway through this earnings season, the second-best performance in at least five quarters.

More than two-thirds, or 27 of the Nifty 50 constituents have reported earnings for the January-March period. Of this, 17 companies met estimates, four beat the consensus forecast while six missed it, according to BloombergQuint’s analysis.

Still, Gautam Chhaochharia, analyst at UBS, expects earnings per share forecast of the Nifty companies to be lowered. Analysts may cut EPS estimates by 28 percent year-on-year for the fiscal ending March 2020 and by 18 percent for 2020-21, he said. Chhaochharia also expects India Inc.’s earnings to grow at 16 percent and 14 percent year-on-year in the ongoing and next fiscal, respectively.

The 27 companies reported a combined EPS of Rs 83.8 in the three months ended March. That’s in line with Rs 85.9 estimated for them. The combined EPS forecast for all 50 companies stood at Rs 141. 2 when the earnings season kicked off on April 11.

While earnings are recovering in the fourth quarter, Bharat Iyer, analyst at JPMorgan, said the performance will be supported by a weak base of financial services providers. The sector, according to NSE data, has the highest weight of 37.36 percent in the Nifty 50.

Here’s how the sectors have fared so far:

Q4 Nifty Earnings: The Second-Best In Five Quarters So Far

Automobile

The sector so far missed estimates for the fifth straight quarter.

  • Eicher Motors: Weak demand and inability to pass on higher costs impacted financials.
  • Maruti Suzuki: Lower volumes, higher discounts and capacity ramp-up costs impacted margin.
  • Hero MotoCorp: Production cuts to correct inventory and promotional expenses dented earnings.

Cement

Construction

  • Larsen & Toubro: Met estimates even as operating margin fell.
  • Maintains revenue and order inflow guidance for the ongoing financial year.

Consumer Sector

Muted performance for third straight quarter.

Energy

Financial Services

  • Axis Bank: Missed estimates. CASA and retail term deposits together were up 21 percent year-on-year, but slippages stood at multi-quarter low.
  • HDFC Bank: Higher net interest income and lower provisions aid profit; asset quality remained stable.
  • ICICI Bank: Gross slippages rose; high provisions dragged fourth-quarter earnings.
  • Kotak Mahindra Bank: Profit rose aided by strong loan growth; asset quality remained stable.
  • Yes Bank: Suffered loss against an expectation of profit; bad loans and provisions surged.
  • State Bank of India: Asset quality improved with lower slippages; net interest margin expanded.
  • Indiabulls Housing Finance: Profit missed estimates; disbursements fell, and bad loans rose.

Information Technology

Reported stable earnings so far for the third straight quarter.

Metals

  • Tata Steel: Higher growth of European division drove the operational performance.
  • Vedanta: Lowered debt but provided “conservative” guidance; concerns over related party transactions.

Telecom

  • Bharti Airtel: India mobile revenue growth turned positive for the first time since the entry of Reliance Jio Infocomm in September 2016.
  • Bharti Infratel: Biggest revenue drop in 23 quarters; tenancy continued to decline.
  • Reliance Jio: Average revenue per user missed estimates and declined for sixth quarter in a row.