Experts say that there is a possibility double-digit earnings growth could be seen after the September quarter
We are in the middle of earnings season and top companies have already announced their June quarter numbers. FMCG majors including ITC reported profit growth while Britannia Industries reported a marginally fall in profit. With the auto sector in a slump, Mahindra & Mahindra posted a 29 percent year-on-year (YoY) drop due to weak demand across segments.
"Unless there is revival happening there would not be any pick up in corporate profitability and earnings. A combination of fiscal measures and monetary measures are required to achieve this," said Joseph Thomas, Head of Research at Emkay Wealth Management.
The June quarter is likely to mimic the March quarter with financials leading the growth while consumer discretionary, consumer staples, industrials, material, and real estate could post declining trend sequentially in the top-line growth.
However, experts say that there is a possibility that double-digit earnings growth could be seen after the September quarter. Sectors like auto and auto ancillaries, consumer discretionary and FMCG would be affected by the demand slowdown.
Here's a list of the top companies which have declared June quarter numbers:
Titan Company: Profit rises 6 percent, CLSA stays positive
Titan Company has registered 6.2 percent jump in its Q1FY20 standalone net profit at Rs 370.7 crore against Rs 349.2 crore in the same quarter last fiscal. Revenue of the company rose 14.4 percent at Rs 4,939.7 crore versus Rs 4,319 crore.
Earnings before interest, tax, depreciation and amortization (EBITDA) was up 14.1 percent at Rs 565.3 crore, while margin was flat at 11.4 percent. The company's other income stood at Rs 56 crore, while finance costs were at Rs 68.1 crore.
Macquarie said it continued to like the long-term market share gain thesis of Tanishq, but maintained a neutral rating on the stock and cut price target to Rs 1,078 from Rs 1,294 per share as near-term demand could be hit on high gold prices.
CLSA slashed price target on Titan to Rs 1,150 from Rs 1,225 per share, though it maintained a positive stance on the stock.
Tata Steel: Steep decline in YoY profit of 64 percent
Tata Steel declared a steep 64.3 percent YoY decline in June quarter profit to Rs 693 crore amid muted revenue growth and subdued operating income. The profit in the corresponding quarter last year was Rs 1,940.8 crore. Lower other income (down 29 percent YoY) also impacted the bottom line.
Revenue during the quarter grew 1.27 percent YoY to Rs 35,947.1 crore, dented by lower domestic and Europe growth. It was supported by Tata Steel BSL (erstwhile Bhushan Steel acquired under NCLT) which grew 105.5 percent YoY to Rs 4,332.73 crore in Q1.
Tata Steel India business declined nearly 2 percent to Rs 16,091 crore and Tata Steel Europe revenue fell 11.77 percent to Rs 14,495 crore compared to a year ago. However, the company has delivered 11 percent YoY volume growth for production and 5 percent YoY for deliveries.
HPCL: inventory loss drags profit 53 percent lower
Hindustan Petroleum Corp (HPCL) reported a 53 percent drop in June quarter net profit mainly due to inventory losses caused by a fall in oil prices and a decline in refinery margins.
Net profit slipped to Rs 811 crore in April-June as compared to Rs 1,719 crore a year back, the company's Chairman and Managing Director Mukesh K Surana said.
"The decrease in profit is due to the sharp decline in crude prices in the month of May and June 2019 leading to inventory loses both at refinery and marketing, and also lower average cracks for all products except for LPG and fuel oil," he said. Also, there was reduced throughput at refineries due to the planned shutdown which impacted profits.
ITC: Cigarette business helps profit grow 12 percent YoY
FMCG major ITC reported 12.6 percent YoY profit growth to Rs 3,173.94 crore for the June quarter. The growth, driven by the cigarette business and other income matched Street expectations. The company had a profit of Rs 2,818.68 crore in the year-ago period. Sequentially though the net profit de-grew 8.8 percent.
Revenue during the quarter grew 5.8 percent YoY to Rs 11,502.82 crore with cigarette business growing 6 percent YoY to Rs 5,433.4 crore. On a quarter-on-quarter (QoQ) basis, topline fell 5.8 percent and cigarette segment registered a 1 percent decline QoQ.
HSBC maintained its buy call on the stock but slashed price target to Rs 320 from Rs 330 per share. CLSA also remained buyer on the stock with a target price at Rs 365 per share as the stock provided attractive risk-reward.
Mahindra & Mahindra: Profit drops 29 percent on weak demand
Mahindra and Mahindra on August 7 reported adjusted net profit at Rs 892.7 crore for the June quarter, a 29 percent YoY drop due to weak demand across segments.
Numbers include those of Mahindra Vehicle Manufacturers, a 100 percent subsidiary of M&M. The bottom line missed analysts’ expectations, as profit was pegged at Rs 1,032 crore, according to a poll of analysts conducted by CNBC-TV18.
Profit in the corresponding period last fiscal stood at Rs 1,257.22 crore. The reported Q1 profit was Rs 2,259.7 crore, showing an 80 percent growth YoY due to the one-time (exceptional) gain of Rs 1,367 crore.
"For the passenger vehicle (PV) segment, Q1FY20 is the fourth consecutive quarter of reduction, the worst ever de-growth since Q3FY01. PV demand continues to be impacted by the slowing down of the overall economy, which along with tight credit conditions and delayed monsoon has impacted consumer sentiment in both urban and rural India," M&M said.
HCL Tech: Operating income drags profit lower, Nomura retains BUY
HCL Technologies reported a 13 percent sequential decline in the June quarter (Q1) profit at Rs 2,220 crore, dented by operating income, but maintained full-year revenue growth guidance. The profit in the previous quarter was Rs 2,568 crore. The YoY profit fall was 7.6 percent.
Revenue was ahead of estimates at Rs 16,425 crore in the June quarter, growing 2.7 percent sequentially and 18.7 percent YoY, the company said in its BSE filing. Revenue in dollar terms increased 3.8 percent QoQ (15 percent YoY) to $2,364 million and the same in constant currency grew by 4.2 percent QoQ (up 17 percent YoY).
Nomura has maintained buy call on the stock with a target at Rs 1,270 per share. CLSA has maintained a buy rating on HCL Technologies with a target at Rs 1,380 per share.
Britannia Industries: PAT falls marginally on sluggish demand
Britannia Industries has reported a marginal fall in its June quarter net profit amid sluggish demand. The company's Q1FY20 net profit was down 3.5 percent at Rs 249 crore against Rs 258.1 crore in the same quarter last fiscal. Revenue rose 6.2 percent YoY at Rs 2,700.4 crore versus Rs 2,543.8 crore.
Earnings before interest, tax, depreciation and amortization (EBITDA) rose 1.4 percent at Rs 394.9 crore against Rs 389.4 crore in the year-ago, while margin declined to 14.6 percent versus 15.3 percent in Q1FY19.
Adani Enterprises: Consolidated net profit jumps 7-fold
Adani Enterprises on August 8 reported over a sevenfold jump in consolidated net profit to Rs 570.14 crore for the June quarter on the back of higher income. The Gautam Adani group company had clocked a profit of Rs 80.14 crore in the year-ago period, Adani Enterprises said in a BSE filing.
The company in a statement said the net profit attributable to owners for June quarter increased to Rs 601 crore as against Rs 169 crore in the same period of 2018-19. This includes a one-time income of Rs 328 crore recognised in the company's MDO (Mine Development and Operations) business.
Godrej Properties: Decline in total expenses propels PAT higher
Despite a decline in its revenues, Godrej Properties reported a nearly two-fold increase in consolidated net profit for the June quarter at Rs 89.87 crore mainly on the back of a decline in total expenses. The company had reported a net profit of Rs 34.25 crore in the corresponding quarter last fiscal.
Its total income for the April-June 2019 quarter stood at Rs 713.84 crore as against Rs 1,066.73 crore, registering a decline of 33.08 percent. The total expenses for the quarter declined 42.76 percent to Rs 567.84 crore from Rs 992.14 crore in Q1 FY19.
Aurobindo Pharma: Profit jumps 40 percent YoY
Aurobindo Pharma reported a 40 percent YoY rise in net profit to Rs 635.8 crore in the first quarter ended June 30, led by strong sales growth of US, Europe and antiretroviral businesses. The company reported a net profit of Rs 455.7 crore in the corresponding quarter of the previous year.
The numbers were better than analysts' estimates. Reuters Smart Estimate projected a net profit of Rs 627.3 crore and revenues of Rs 5,264.6 crore. Revenues rose 28.1 percent YoY to Rs 5,444.6 crore.
Emami: Net profit zooms 48 percent on margin improvement
FMCG firm Emami's June quarter consolidated net profit shot up 48 percent YoY to Rs 39.1 crore as margin improved on lower advertising expenses. It was partly supported by other income. Profit in the corresponding period last year was at Rs 26.5 crore.
Consolidated revenue from operations during the quarter increased 5.6 percent to Rs 648.6 crore compared to year-ago despite adverse economic conditions.
"The June quarter witnessed challenges in terms of adverse economic conditions such as channel liquidity issues and muted rural incomes which coupled with a high base in Q1FY19 impacted growth levels in the domestic business," Emami said in its BSE filing.
UltraTech Cement: Q1 numbers beat estimates
UltraTech Cement has reported higher-than-expected earnings for June quarter, with standalone profit doubling to Rs 1,199 crore from Rs 598.4 crore in the previous year. The strong growth in revenue, operating income and margin boosted profitability. Standalone revenue grew 14.8 percent year-on-year to Rs 9,795 crore in Q1.
"After the completion of Century Textiles transaction and coupled with the ongoing expansions, the company will achieve an installed capacity of 117.35 million tonnes per annum, inclusive of its overseas operations," UltraTech said.
Siemens: Profit rises 21 percent at Rs 250cr
Siemens posted a 21 percent rise in consolidated net profit at Rs 250.1 crore for June quarter 2019 mainly due to higher income. The company's net profit in the year-ago period stood at Rs 206.1 crore, a BSE filing said. Siemens follows October-September financial year. Total income rose to Rs 3,300 crore in the latest quarter from Rs 3,163.6 crore a year earlier.
Sunil Mathur, Managing Director and Chief Executive Officer, Siemens said, “We have delivered very solid results in the third quarter although we see a slowdown in Capex related ordering by our customers, both public and private, and across our market verticals."
Lupin reported a net profit of Rs 303 crore in the June quarter, a jump of 49.5 percent YoY, helped by sales growth in key markets such as the US, India and the Asia Pacific. The company reported a net profit of Rs 202.7 crore in the same period of the previous year.
Lupin revenues rose 15 percent YoY to Rs 4,418.4 crore in Q1FY20. The earnings before interest, tax, depreciation and amortisation (EBITDA) margins stood at 21.4 percent in Q1FY20.
Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.