Global turmoil meets local resilience seems to be the major takeaway for investors as the March quarter earnings season draws to a close. Buoyant domestic demand bolstered corporate bottomlines across sectors, even as the lingering impact of inflation made its presence felt.
‘The Great Indian Consumption Story’ gave a fillip to banking, auto, telecom and FMCG firms.
In contrast, the IT sector was the biggest casualty of the crisis of confidence plaguing the US banking industry. Some missteps of the past added to their woes.
A number of companies posted eye-popping numbers largely due to statistical anomalies, while a few others met the Street’s expectations with predictable ease.
Here’s a concise round-up of how the major companies fared in Q4 FY23 –
Outperformers
India Inc’s biggies once again stamped their dominance on the results season.
Leading the charge was Reliance Industries, which was propelled by its oil-to-chemicals, digital and retail engines. Management commentary on disciplined capital allocation- allayed concerns on the net debt front.
Fellow conglomerate Adani Enterprises too had a standout quarter, with net profit more than doubling on account of strong operational performance across businesses.
The stars of the show, however, were the banking and financial names.
Robust disbursements despite rising rates, healthy interest margins and stable asset quality were the highlights of their Q4 showing.
A round of applause for India’s public sector banks, whose cumulative profit crossed the Rs 1 lakh crore mark in the financial year 2023, with market leader SBI accounting for nearly half of the total earnings.
From posting a total net loss of Rs 85,390 crore in 2017- 18, PSBs have indeed come a long way.
The health of the overall Indian banking sector stood out in stark contrast to the Silicon Valley Banks and Credit Suisses of the world.
Encouraging loan growth in the retail segment, which is seeing growing competitive intensity, was further testimony to the India growth story.
This factor also benefitted the FMCG pack, which saw heartening profit growth, though volumes and margins trailed estimates amid still elevated input price pressures.
ITC delivered a smoking hot set of numbers, aided by a 12 percent jump in cigarette volumes and post-pandemic revival in the hotel segment.
The post-Covid pent-up demand fueled another cohort -- the auto majors.
Product launches to cater to varied consumer preferences, price hikes and easing supply chain issues added to their momentum.
Washouts
It was a quarter to forget for India’s IT giants.
The banking crisis in the US – the bread-and-butter market for India’s software services industry – meant that the companies were clobbered by project cancellations, margin contraction and slowing order inflows.
Add to this the ongoing concerns about the Western economies tipping into recession amid the aggressive rate hikes by the Fed, ECB et al, and we have a perfect bag of woes for investors.
Commodities players too had a rough end to the fiscal, largely in tandem with softer prices globally, though Coal India was the victim of a characteristically PSU problem – a bloated wage bill.
Yes Bank bucked the positive trend in the banking space by posting a 45 percent drop in profits, prolonging the pain for its shareholders.
Voltas, UPL, NTPC and UltraTech Cement suffered from varied causes, ranging from rising competition and stuttering sales to input price pressures.
Mixed Show
Companies in this list posted a mixed set of numbers. Most were in-line with estimates, with no surprises on either side of the spectrum, but a few marquee names wilted under pressures building up in some pockets of the economy.
Take the case of Hindustan Unilever.
India's largest fast-moving consumer goods company marked a steady end to FY23 with an around 10 percent uptick in both revenue and profit for the March quarter.
However, it was the underlying volume growth of 4 percent which betrayed the persisting hangover of inflation, especially in rural areas which saw volumes shrinking 3 percent on-year.
“Looking forward, the near-term operating environment is likely to remain volatile. With inflation easing…and sequential softening in a few commodities, price and volume growths will rebalance,” the company’s CEO and MD Sanjiv Mehta said.
Weakness in rural demand also played spoilsport for Bajaj Auto, which also had to contend with challenges on the exports front.
The challenging operating environment showed up in the quarterly numbers of a few more companies in this group.
One-off cases
Axis Bank posted a hefty Q4 net loss of Rs 5,728.42 crore on account of buying Citi Bank's India consumer business. Excluding the exceptional items, the private sector lender’s profit would have soared 61 percent to Rs 6,625.29 crore.
Tata Steel Q4 profit slumped 84 percent but still beat estimates.
Dr Reddy’s net profit jumped 10-fold to Rs 959.2 crore following one-off charges in the base quarter.
Cipla Q4 net profit zoomed 45 percent on year to Rs 525.65 crore, but lagged expectations due to a one-time loss of Rs 182.2 crore on account of goodwill impairment for Yemen operations.
Summing up the results season, Satish Menon, Executive Director at Geojit Financial Services, said the worst performer is IT, while the best is banking. Auto has also done well, but pent-up demand is slowing down.
“FMCG has been marginally below par due to low demand and higher operating costs while cement is encouraging. Businesses and sectors which have global exposure are showing a weak trend,” he added.
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