Earnings Wrap --Rise in input costs dents EBITDA margin… ICICI Securities,

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R i s e   i n   i n p u t   c o s t s   d e n t s   E B I T D A   m a r g i n …
• The Q4FY11 performance of Sensex companies has been mixed
with strong topline growth while profitability growth has been
muted owing to moderation of the EBITDA margin driven mainly
by cost inflation. On a QoQ basis, revenue growth of 15.7% has
been the highest in the preceding eight quarters. However, net
profit growth on a QoQ basis has moderated to 4.9% in Q4FY11
from 13.8% in Q2FY11 and 8.1% in Q3FY11
• The EBITDA margin has declined by 260 bps on a QoQ basis and
150 bps on a YoY basis to its lowest level in the last eight quarters
to 19.8%. The decline in EBITDA margin was mainly on account of
the increase in raw material cost to sales ratio by 320 bps on a
QoQ basis mainly due to the impact of an increase in commodity
prices resulting in higher input costs across sectors
• Of the sectors, capital goods registered a strong performance as
Q4 is the best quarter for the industry. On a YoY basis, revenues
and profitability have increased by 22% and 34%, respectively.
On a QoQ basis, the sector delivered strong revenue and
profitability growth of 64% and 99%, respectively. Other sectors
excluding oil & gas have delivered positive growth in profitability
in the range of 6-32%. The oil & gas sector has been a major drag
on the aggregate profitability with a QoQ decline of 33% in net
profit on account of higher subsidy sharing burden by upstream
companies in FY11, a majority  of which was accounted for in
Q4FY11