Latest corporate earnings season muted as shocks abound

Written by fe Bureau | Mumbai | Updated: Jan 30 2014, 16:56pm hrs
India Inc earningsCompanies from the financial services space failed to meet consensus estimates, lagging the quarterly earnings per share estimates of analysts by 46% to 8%.
The latest earnings season appears to be progressing with a muted tone with an equal number of companies posting positive and negative surprises.

As per a Bloomberg compilation of close to 375 companies that have announced their Q3 numbers so far, nearly 40% reported flat-to-negative y-o-y earnings growth in the quarter. For a subset of 70 companies, more than half failed to meet analyst expectations on quarterly profits.

Companies from the financial services space, including Larsen & Toubro Finance Holdings, M&M Financial Services, GIC Housing Finance and Shriram Transport Finance Company Ltd, failed to meet consensus estimates, data show. These companies lagged the quarterly earnings per share (EPS) estimates of analysts by 46% to 8%.

Even Kotak Mahindra Bank and the Indian Overseas Bank trailed estimates by 20% and 42%, respectively. While higher provisions and slower loan growth weighed on the net earnings of KMB, restructured accounts impacted the earnings of IOB, which declined more than 35% y-o-y to R116.5 crore for the three months to December 2013.

Telecom majors Bharti Airtel as well as Idea Cellular Ltd seem to have lagged analyst estimates. Although Bhartis quarterly earnings more than doubled to Rs 610 crore compared to the same period last year, it looks to have trailed consensus estimates by 41%. In terms of EPS expectations, the actual number was 39% below anticipation.

Earnings of large caps like Sesa Sterlite, Hindustan Zinc, JSW Steel, Cairn India and Jindal Steel were also below consensus estimates with the actual EPS lagging the estimates in the range of 38% to 3%.

Asian Paints was one of the prominent disappointments as its Q3 net sales and earnings were below consensus outlook due to weak demand of industrial paint and high raw material cost.

Certain names from defensive sectors that lagged estimates were Novartis, Mindtree, BioCon and Dabur India. While an adverse impact of the

Drug Price Control Order impacted the profit of Novartis, quarterly forex losses and higher ad expenses impacted Mindtree and Dabur India.

Meanwhile, FMCG heavyweights HUL and ITC managed to beat Street estimates on earnings by 13% and 1% even as their toplines were barely in line with analyst assessments.