Q2FY11 Results Tracker -Mixed bag so far; No real disappointments:: Religare

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Q2FY11 Results Tracker 2
Mixed bag so far; No real disappointments
We take a quick second look at results in the 2nd quarter earnings season. Twothirds
of the way through—316/500 companies have reported till the 30th—it
has been a mixed bag, with no real sector-level disappointments, except
Cement, to some extent. While top-lines hold steady, margins are peaking,
thanks to firming up of commodity prices over last quarter. IT, Financials, and
consumer discretionary cos. have posted strong numbers while it has been a
weaker-than-expected quarter for cement companies.




Earnings announcements thus far: 316/500 BSE500 companies have announced
their results posting a revenue growth of 20%* YoY (9%* sequentially) and profits
rising 17%* (14%* sequentially). EBITDA margins for the universe stood at
20.3%* whereas aggregate PAT margin has come in at 11.8%*. While PAT
margin has improved sequentially by 49bps, it has deteriorated YoY (24 bps) and
is expected to deteriorate further in the coming quarters, as interest costs rise.
Financials, IT and Autos post strong numbers: Strong volume growth has helped
IT companies post a good quarter (14% Revenue and 13% PAT growth
sequentially) while a favourable monsoon season has helped Chemical &
Fertilizer stocks (29% Revenue and 16% PAT growth) put on a good show. Good
show by consumer discretionary companies (Autos – 29% Revenue growth and
22% PAT growth) have renewed our belief in the India consumption story while
on the back of general buoyancy in the economy and strong credit demand,
Financials have done well (PAT growth of 23% for Banks and 41% for NBFCs).
Strong revenue/profit growth expected amid falling margins: Overall we expect
2Q ex-oil profits to rise 29% for the Sensex, and 21% for the broader 135-stock
RCML universe. Sequential growth would remain muted with low single digits at
5.5% and 2.6% respectively. Top-line growth is coming back at a fast clip,
echoing trends in the broad economy, and we expect 19% growth in revenues
for both the narrow (Sensex) and the RCML universe.
Important earnings this week: Major cos. reporting this week include Pharma
majors Ranbaxy and Cipla, Telecom giants Bharti Airtel, Reliance
Communications, OMCs BPCL, HPCL and Tata Motors, SBI, among others.
Focus shifts back to global macro: With earnings season turning out to be a
mixed bag with several sectors such as consumer discretionary, IT and Financials
putting up strong performance, the focus will now shift back to the global macro
(FOMC meet on 2nd/3rd Nov). With the Coal India IPO out of way (listing on
Thursday 4th November) and several other primary issuances planned for this
quarter and the next and strong foreign capital inflows, we believe that markets
might continue grinding northwards in the absence of any major global shock.