Earnings season holds out sliver of hope
defying the subdued sales trend that was visible across most sectors. Those that disappointed in earnings included Tata Steel, SAIL, Cairn India, Tata Motors, PNB and ONGC.
SECTORAL PERFORMANCES
A sectoral snapshot would provide greater insight into the companies that did well and the specific reasons for the uptick in the reported numbers.
Auto
On the whole, two-wheelers, cars and commercial vehicles have largely seen weak revenue growth due to pressure on volumes, in both, domestic and export markets. According to Motilal Oswal’s September 2012 quarterly review, among those bucking the trend, Bajaj Auto reported better than expected numbers, buoyed by higher realisations. Car market leader Maruti Suzuki too reported better than estimated results, buoyed by lower staff cost and royalty provision write-back, along with a favourable forex position. Tata Motors’s Jaguar & Land Rover arm reported in-line performance with quarter-on-quarter margin improvements driven by favourable market mix and forex gains.
Capital Goods
The capital goods sector, considered a proxy for business investment plans, has been consistently battered in the government’s official IIP estimates released every month. Flat revenues y-o-y, due to weaker execution and lower off-take by industrial customers was seen, with order flows continuing to be under pressure. Private sector equipment majors L&T and Thermax, however, reported better than estimated numbers, even as ABB and Havells largely disappointed. L&T’s net profit was 11 per cent higher than estimates, driven by improved margins and higher other income. In power generation, the overall climate continues to remain constrained and BHEL
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