With the first quarter earnings season having crossed the halfway mark, Motilal Oswal (MOSL) sees mixed trends emanating from it. In fact, aggregates have been impacted by corporate banks as well as index heavyweights such as Tata Motors and ICICI Bank.

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“Of the 32 Nifty companies that have declared their earnings, 20/25 have either met or exceeded our estimates on the PAT/EBITDA front. The earnings upgrade/downgrade ratio is < 1, with 23 MOSL Universe companies witnessing upgrades of 3 percent+ and 43 witnessing downgrades of 3 percent+,” the brokerage house said in a report.

In fact, it has also downgraded estimates for earnings per share (EPS) as well. “The Nifty EPS estimates for FY19 have been cut by 3.6 percent to Rs 559 from Rs 580, driven by Tata Motors and ICICI Bank, which account for 70 percent of the EPS cut,” analysts at the firm wrote in the report.

Meanwhile, among Nifty constituents, it termed the earnings of Axis Bank, ICICI Bank, Vedanta, Wipro, Airtel, auto companies along with Kotak Bank, Power Grid and Zee have missed profit estimates. Larsen & Toubro and Dr Reddy’s have exceeded estimates, it added.

Five key trends from the results declared so far:

Consumption recovery continues with most of the FMCG companies highlighting rural outperformance vs. urban.

Within banks, private banks have seen some margin pressures while PSU banks have reported moderation in fresh slippage generation. NBFC’s post another quarter of healthy core performance.

Auto companies have missed profitability estimates led by RM cost pressures and lower other income while demand outlook remains healthy.

In IT the demand is showing gradual improvement with continued outperformance of Tier II companies vs. Tier I.

Cost pressures have marred the profitability of Cement companies even as volume growth remains in –line.

Disclosure: Motilal Oswal is is one of the four launch partners of CNBCTV18.com.

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Source: Moneycontrol.com

First Published:Aug 2, 2018 3:54 PM IST