December quarter earnings show receding negative surprises so far
Sterlite Industries, Hero Motocorp, Idea Cellular and Sesa Goa observed negative earnings surprise of 14% to 21%, while blue chips like Dabur and Reliance Power, too, failed to meet consensus estimates, albeit with a smaller margin of 2% and 10%, respectively.
About 41 of the 96 companies disappointed on the sales even as, on the whole, the top line managed to swing in a 7% surprise compared to expectations.
Among frontline blue chips, Sesa Goa and Reliance Infra encountered sharp drops of 91% and 45% in their top line even as Infosys, HCL Tech, Kotak Mahindra Bank and Cairn India reported strong advances of 12% to 38% compared to last year.
The results of ITC, L&T and Maruti Suzuki provided the bright spots. While ITC sustained its robust operating margin in the cigarette unit, capital goods major L&T delighted the market with an strong y-o-y growth of 14% in its order book. The net profit of auto giant Maruti Suzuki more than doubled to R501 crore compared to last year, its first increase in earnings after 18 quarters.
On the other hand, Hindustan Unilever, the defensive large cap that beat the market in the last two years, reported lower-than-expected y-o-y volume growth of 5% in the three months to December. The company’s decision to increase the royalty payment to its parent, Unilever, to 3.15% of sales by fiscal 2018 initiated a dozen analyst downgrades.
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