Highlights from Sep'23 results season

The September 2023 results season has unfolded with notable trends across various sectors, offering insights into the performance of key players.

 

Banking Sector:

  • Large banks, excluding HDFC Bank, displayed divergent trends in profit growth, ranging from 10% for Axis Bank to a robust 36% for ICICI Bank.
  • Net Interest Margins (NIMs) experienced a compression of up to 25 basis points (bps).
  • Loan growth across these banks ranged from 15% to 25%, indicating strong asset quality.

 

Information Technology (IT) Companies:

  • Results from IT companies were mixed, with margin-led beats by TCS, Infosys, and HCL Technologies.
  • In contrast, Tech Mahindra and Wipro reported weaker-than-expected results.
  • Quarter-over-Quarter (QoQ) revenues fluctuated from a decline of 2% to an increase of 2%.
  • Many IT firms faced significant headcount declines and revised guidance, suggesting a challenging second half of FY24.

 

Consumer Sector:

  • Consumer results shed light on weak demand, evident in the volume growth of 0-3% for staple companies like HUL, Marico, and Colgate.
  • EBITDA margins exhibited an upward trend Year-over-Year (YoY), showing an increase of 50-340bps. However, rising competitive intensity has become a concern.
  • Discretionary results mostly fell short of expectations, as the shift in the festive season impacted demand for companies like Jubilant FoodWorks, DMart, Havells, Amber, and Nestl√©.

 

Automotive Sector:

  • Results in the automotive sector proved robust for both Passenger Vehicle (PV) and Two-Wheeler (2W) Original Equipment Manufacturers (OEMs).
  • Maruti Suzuki, in particular, posted impressive EBITDA growth of 73%, driven by market share gains in SUVs and a 290bps margin expansion.
  • 2W OEMs such as Bajaj and TVS witnessed a 22% YoY growth in EBITDA, mainly attributed to margin expansion of 80-50bps.

 

Cement Sector:

  • Cement companies reported solid volume growth ranging from 7% to 18%, accompanied by lower energy costs, leading to YoY unit EBITDA increases.
  • Rural demand for cement products remained robust.

 

Pharmaceutical Sector:

  • Generic pharmaceutical companies like Cipla, Dr. Reddy's Laboratories, and Torrent Pharmaceuticals generally delivered results in line with or above expectations.
  • Their steady performance was driven by a resilient US business.

 

Chemicals Sector:

  • The chemicals sector fell short of estimates, with EBITDA declining by 19-43%, primarily impacted by global channel destocking and elevated pricing pressure.

 

Industrial Sector:

  • Select industrial companies, including Supreme Industries, Polycab, and KEI Industries, reported strong results driven by margin expansions.

 

Real Estate Sector:

  • Property companies such as DLF and Oberoi Realty outperformed, with PAT (Profit After Tax) growth of 31-43% YoY.
  • Pre-sales guidance for the second half of the year remained robust.
  • Real Estate Investment Trusts (REITs) faced challenges with portfolio occupancies declining by 2-3 percentage points QoQ.

 

These sector highlights from the September 2023 results season offer a comprehensive overview of the performance and trends across various industries, reflecting the evolving dynamics of the Indian market.

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