Earnings Wrap :: Sept 2011:: ICICI Securities,

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I n p u t   c o s t   p r e s s u r e s   d e p r e s s   E B I T D A   m a r g i n …
• The Q1FY12 performance of Sensex companies has been lower
on a QoQ basis due to the dual impact of decline in revenues and
lower profitability due to decrease in EBITDA margin. The main
contributor to the decline in revenues and profitability has been
the capital goods sector, which has seen a decline in revenues
and net profit by 50% and 65%, respectively, owing to Q1 being a
traditionally weak quarter for the sector. Excluding the capital
goods sector, revenues of Sensex companies have increased by
2% whereas net profit has declined by 7%
• The EBITDA margin has declined by 60 bps on a QoQ basis and
160 bps on a YoY basis. The decline in EBITDA margin was
mainly on account of the increase  in  raw  material  cost  to  sales
ratio by 160 bps on a QoQ basis and 380 bps on a YoY basis due
to the impact of an increase in commodity prices resulting in
higher input costs across sectors
• Of the sectors, capital goods has been the major drag owing to
the traditionally weak quarter. Among other sectors, oil & gas and
metals have delivered positive growth in profitability of 19% and
10%, respectively, while the power and auto sector delivered
negative growth in net profit in the range of 22-25%