Several one-offs mask poor results The aggregate Sensex headline profit growth for Q2FY16 came in at 5.3% on a consolidated basis (vs. 2% BofAML estimate). However, the bad news is that the surprise was entirely driven by a few large one-offs (mainly pension related gains in Tata Steel and tower sale in Bharti). Excluding one-offs, aggregate profit for Sensex companies was actually below our estimate. Secondly, aggregate Sensex sales continued to decline for the fourth consecutive quarter\u2014a first in history. Thirdly, our broader BofAML universe companies disappointed on an aggregate basis. Nearly 60% of the companies missed analyst estimates. The only silver lining is that Ebitda margins, though below estimates, continued to show improvement on a y-o-y (year on year) basis. Margins recover\u2026but largely driven by oil & below estimates Aggregate Ebitda (earnings before interest taxes depreciation and amortisation) margins for Sensex companies showed a 70bp expansion on a y-o-y basis. However this was below our expectation of 150bps and was completely led by oil. Ex-energy Ebitda margin declined by 100bp, led by Pharma (300bp) & Metals (180bp). Oil & Gas, Pharma, industrials drag growth; Banks, IT lead Among Sensex cos, Banks (HDFC Bank, ICICI Bank, SBI), IT (TCS, Infy) lead the growth. On the other hand, Oil & Gas (GAIL, ONGC), Pharma (Sun Pharma, Lupin) & Industrials (BHEL, L&T) drag down growth. Expectations still high\u2026downgrades to continue During the earnings season, we have witnessed a sharp downgrade in FY16 Sensex EPS (earnings per share) growth from 16.5% to 12.5%. We expect further downgrades to FY16 Consensus Sensex EPS growth to c.8%-9%. FY17 Sensex EPS growth has largely remained stable near 22% which we believe is optimistic and could also see significant downgrades.