Blue-chip companies logged strong performance during the September quarter and have beaten analyst expectations. Most smaller companies have performed in line with expectations, analyst research showed.
Results by auto companies thus far have been promising, with most of the them surpassing analysts’ expectations. “The positive results were largely driven by lower commodity costs, better product mix, favourable foreign exchange rate and operating leverage.”
Analysts also said that companies in the oil & gas sector have so far reported mixed results. RIL outperformed the estimates due to its sustained performance in the O2C (oil-to-chemicals) segment.
“Tata Steel, UPL, and Tech Mahindra contributed adversely to Nifty earnings. Only five companies within Nifty reported profits below our expectations, while 12 recorded a beat and 19 registered in-line results so far,” the report said.
The data also showed that the aggregate earnings of 133 leading companies (that include blue chips) grew 52% and was marginally higher than analysts’ estimate of 50%. “The growth was fuelled by domestic cyclicals, such as banking & financials (BFSI) and auto companies.”
BFSI clocked a 41% year-on-year growth, while auto companies, led by Maruti Suzuki, registered a growth of 45% (against 30% estimates).
On the sectoral front, most software exporters reported weak performance, in line with expectations. Some of these companies also cut their revenue guidance for FY24, which indicates that the rest of the fiscal will be challenging for these companies.
For banks, earnings growth has broadly stood in line, owing to steady loan growth and robust asset quality even as margins compressed further (resilient for PSU banks so far). Asset quality has continued to improve, analysts said. NBFCs are seeing lending demand momentum continuing to be strong in personal utility as well as commercial vehicles. While lower-ticket housing demand has been buoyant, a weakness has been observed in affordable housing (below INR 30 lakh).
Of the 50 Nifty stocks, 36 companies have declared results so far, and their net profit has jumped 35% over the previous year, a report by Motilal Oswal Financial Services showed.
