Earnings growth gains momentum…
• Earnings growth for Sensex companies gained momentum (up
21.6% YoY) after the lacklustre growth witnessed in Q4FY14 (up
only 5.4% YoY). The Sensex topline grew 13.7% YoY while its
operating profit grew 21.6% YoY in Q1FY15. Operating profit
growth exceeded the topline growth, aided by margin expansion
of 112 bps YoY. The Sensex companies gained from lower raw
material costs (down 43 bps YoY) and operational efficiencies
arising out of lower other expanses (down 72 bps YoY). Adjusting
for one-offs, Sensex PAT grew 21.6% YoY, aided by higher other
income (up 19.0% YoY) partially offset by higher depreciation
• Within the sectoral performance, auto and IT clearly outpaced the
broader Sensex topline and bottomline growth. However,
domestic infrastructure and capex oriented sectors like capital
goods, power and oil & gas are yet to confirm the economic
recovery and reported a subdued performance in Q1FY15
• The auto industry is witnessing some green shots of recovery, with
overall volumes growing ~11% YoY led largely by the 2-W
segment, which grew ~14% YoY. In the auto space, specifically,
Tata Motors’ numbers came in much higher than estimates owing
to a strong performance from JLR, which saw a favourable impact
of the product/geography mix
• Among other sectoral performances, the FMCG sector witnessed a
good revival in topline growth (up 19.3% YoY), led by a mix of
traction in volume and changes in sales mix. In the IT space, dollar
revenue growth for tier-1 players was healthy yet polarised and
grew an average 3% QoQ. In the banking space, private banks
sustained their healthy performance (earnings up 14% YoY) while
PSU banks performed relatively well vis-à-vis previous quarters
Link: http://content.icicidirect.com/mailimages/IDirect_EarningsWrap_Q1FY15.pdf
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