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 Nestlé.

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.