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Q4 Results: How India Inc. Fared In Fourth Quarter

32 of the 50 Nifty companies have either met or beat estimates in the March quarter.

Report card. (Source: BloombergQuint)
Report card. (Source: BloombergQuint)

The number of Nifty companies that either met or beat estimates fell to the lowest in seven quarters in the January-March period as a consumption slowdown, liquidity crunch and higher provisions by banks dragged earnings.

Earnings of 32 of the 50 companies were either in line or above forecasts in the three months ended March, the fewest since the first quarter of 2017-18, according to Bloomberg data. 18 companies failed to meet expectations, the highest in at least two years.

The combined earnings per share of the Nifty 50 constituents stood at Rs 140.50 for the March quarter. That was slightly lower than the consensus estimate by half-a-percent.

Here’s how the sectors have fared this quarter:

Q4 Results: How India Inc. Fared In Fourth Quarter

Auto

  • Sales failed to pick up since festival season last year, higher discounts and production cuts to correct inventory dented fourth-quarter earnings.
  • Brokerages remain cautious on sales in the ongoing financial year.

Consumer Stocks

  • Consumption slowdown impacted sales, but earnings met estimates due to cost cuts.
  • Managements remain cautious in the near term.

Oil And Gas

  • Oil marketers’ earnings surpassed estimates helped by strong marketing segment performance.
  • Lower gross refining and petrochemical margin, and lower-than-expected average revenue per user of telecom arm Reliance Jio Infocomm Ltd. hurt Reliance Industries Ltd.’s fourth-quarter earnings.
  • GAIL (India) Ltd. missed estimates due to weak performance of petrochemical and LPG segment.
  • Oil and Natural Gas Corporation Ltd.’s profit fell the most in 13 quarters due to higher costs and lower oil prices.
  • Outlook remains strong for the sector but global cues could play a spoilsport.

Financial Services

  • Indiabulls Housing Finance Ltd. missed estimates due to liquidity crunch among non-bank financial companies.
  • HDFC Ltd. and Bajaj Finance Ltd. beat expectations on strong loan growth.
  • Yes Bank reported a surprise loss due to higher provisions.
  • IndusInd Bank missed estimates on higher provisions for IL&FS.
  • Outlook, however, remains steady on the back of growth in lending and falling provisions.

Information Technology

  • Tech Mahindra Ltd. missed estimates on lower revenue and EBIT.
  • All other tech companies met estimates in the fourth quarter, but margin contracted.
  • Revenue growth came at the cost of margin. This trend is expected to continue but outlook remains steady.

Metals

  • JSW Steel Ltd.’s profit fell as margin contracted.
  • Hindalco Ltd.’s operating profit was in line with estimates due to better-than-expected performance of domestic aluminium division, including Utkal Alumina.
  • Tata Steel Ltd. beat estimates on strong performance by its European segment.
  • Coal India Ltd. beat estimates on higher realisations and lower costs.
  • Outlook remains muted due to lower metal prices on account of trade wars concerns.

Pharmaceuticals

  • Dr. Reddy’s Laboratories Ltd. beat estimates due to higher sales in emerging markets.
  • Cipla Ltd.’s results were boosted by one-off U.S. sales in the fourth quarter. For the ongoing financial year, it has provided double-digit growth guidance.
  • Sun Pharmaceuticals Industries Ltd. missed estimates as change in distribution model impacted financials.
  • Outlook remains steady.

Telecom

  • Bharti Airtel Ltd. outperformed in the fourth quarter on higher revenue from its India mobile business.
  • Bharti Airtel’s outlook remains positive on the back of rising average revenue per user and deleveraging.
  • Bharti Infratel Ltd. missed estimates due to fall in tenancy.
  • Bharti Infratel’s outlook remains weak due to ongoing tenancy cancellations.

Power

  • NTPC Ltd. missed estimates due to lower plant load factor.
  • Coal supply has increased but transmission losses continue to plague most of the Indian states.
  • The sector continues to have stressed power assets, which could be unlocked due to Insolvency and Bankruptcy Code and Central Electricity Regulatory Commission norms.

Others

  • Grasim Industries Ltd. missed estimates due to lower viscose staple fibre margin; cautious outlook due to global supply glut.
  • Adani Ports and Special Economic Zone Ltd. met estimates even as port margin fell; outlook remains steady due to good guidance.
  • Zee Entertainment Enterprises Ltd.’s fourth quarter was impacted by the telecom regulator’s new tariff order and balance sheet concerns; stake sale by promoter is crucial.
  • UPL Ltd.’s fourth quarter is not comparable due to acquisition of Arysta LifeScience; Arysta synergies key to watch.

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