With the earnings of most Nifty50 companies falling short of analysts’ estimates in Q4FY18, the combined net profit of the index undershot the forecasts by Rs 13,372 crore, data sourced from Bloomberg revealed. The adjusted net profit of the country’s top 50 companies came in at Rs 80,353 crore for Q4FY18, which is 14.3% below what analysts had projected. While over 60% of the index constituents’ bottom lines missed the estimates, only 18 companies could beat analyst estimates during the quarter, data showed.
The largest state-owned lender — State Bank of India — along with Axis Bank reported a combined net loss of Rs 9,907 crore for the three months ended March 2018. While SBI recorded a biggest-ever quarterly loss of Rs 7,718 crore in Q4FY18 as against a net profit of Rs 2,815 crore a year ago, Axis Bank reported an unexpected loss of Rs 2,189 crore in Q4 on higher provisions, the data showed.
Analysts expect the provision requirement of Axis Bank may remain elevated, despite the bank having made heavy provisions on its corporate book over the past few quarters. Net profit at Coal India declined 52% y-oy in Q4, missing the lowest analyst estimate, a company made a Rs 7,384 crore provision on employee gratuity to comply with the recent change in gratuity law.
The earnings at Eicher Motors was 27% lower compared with estimates as it was impacted by impairment on the closure of Polaris JV. The company had taken a hit of Rs 187 crore in the March quarter on account of the JV. Things were no different for Lupin and Dr Reddy’s Laboratories. Mumbai-based Lupin posted a surprise loss of Rs 784 core on the back of exceptional cost on asset impairment of Rs 1,464 crore.
Kotak Institutional Equities observed “The Q4FY18 results were generally below expectations and have resulted in moderate downgrades to FY19 and FY20 net profit estimates,” adding, the Q4 net profit for the Nifty 50 Index fell 9% y-o-y. Barring BPCL and NTPC, the net profit expectations of all public sector undertakings (PSUs) came in below that of analysts’ estimates.
While Maruti Suzuki ’s earnings lagged expectations for the first time in six quarters as higher effective tax hurt the company’s bottom line, Tata Motors reported lower-than-expected earnings in Q4 as weakness at unit JLR overshadowed the stellar performance at its local operations.
Other auto firms such as Bajaj Auto, Hero Motocorp and Mahindra & Mahindra surpassed street estimates on favourable mix and better operational performance.
