India Strategy - Q2 Earnings Beat Expectations; Early Q3 Trends Rule Out Stagflation: ICICI Securities
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ICICI Securities Report
Evidence of pricing power and normalising demand mitigates input cost inflation for manufacturers. Despite cost pressures across sectors, earnings beat was significant within the NSE200 universe (86 beats versus 48 misses) due to better-than-expected demand in terms of topline growth and signs of pricing power across sectors such as cement, steel, paints, building material, fast moving consumer goods and auto which continue into Q3 FY22.
Apart from company level signals, macro level indicator of manufacturer’s pricing power is reflecting in the wholesale price inflation as well (11.6% in FY22 so far).
Better than expected quality of assets for banks as well as relatively robust topline growth for key financial services players boosted earnings beat within financials.
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