It’s been a bit of a mixed start to earnings season with one lot of companies having turned in some splendid numbers — Idea Cellular — but another set not faring so well. Among the surprises were Infosys which seems to be back on track having reported a relatively strong 4.5% sequential revenue growth in the three months to June on the back of a 5.4% increase in volumes. Hindustan Unilever (HUL) should have done well given the gains from softer commodity prices — gross margins expanded 356 basis points y-o-y — but the FMCG major was compelled to pass on some of these to consumers in the form of power prices and some to the trade as higher promotions.
Idea’s performance was driven by higher traffic though analysts were concerned about the modest deceleration in data growth. At Asian Paints, volumes grew better than expected at an estimated 10% though it was lower-end products that sold more indicating consumer demand remains somewhat weak. Cement maker ACC’s margins tumbled to a decade-low with weak demand stifling pricing power. UltraTech too did badly with profits falling 6% y-o-y; moreover, management commentary was none too encouraging either on prices or volumes prompting downgrades of as much as 18% for FY16. Indeed, while it’s early days yet, analysts reckon that while the pace of earnings downgrades may slow down, we haven’t seen the last of them.