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MOSL: Morning India (3/August/21): 1. India Strategy (1QFY22 interim earnings review; In-line; management commentaries indicate recovery is setting in); 2. HDFC; 3. NTPC; 4. Britannia Industries; 5. P I Industr

MOrning India (3/August/21): 1. India Strategy (1QFY22 interim earnings review; In-line; management commentaries indicate recovery is setting in); 2. HDFC; 3. NTPC; 4. Britannia Industries; 5. P I Industries; 6. Cholaman.Inv.& Fn.

 

Today’s top research theme

India Strategy: 1QFY22 interim earnings review; In-line; management commentaries indicate recovery is setting in

• 108 MOFSL Universe and 31 Nifty companies have announced their results as of 31st July'21. Companies that have reported earnings thus far comprise (a) 62% of est. PAT for the MOFSL Universe, (b) 68% of est. PAT for the Nifty, (c) 56% of India's market capitalization, and (d) 77% of the Nifty 50 index weight.
• The 1QFY22 earnings season has been in-line, benefitting from the lower base of 1QFY21, as lockdowns in 1QFY22 were localized and less stringent v/s 1QFY21. Nifty profits for the 31 companies that have posted their results have grown 70% YoY (v/s exp. 64% growth). On the other hand, for the 108 companies in the MOFSL Universe, profit growth stood at 71% YoY (v/s exp. 70% growth). Among the sectors, Cement, Metals, Healthcare, and O&G have outperformed; Autos, NBFC, and Capital Goods have underperformed; and the performances of IT, Consumer, and Private Banks have been in line with expectations.
• Key drivers of 1QFY22 performance: [1] IT - This sector has reported one of the best sequential performances, led by strong sequential revenue growth of 4.5% (USD) and the highest ever deal pipeline, providing earnings visibility going forward. [2] Cement - Strong price realization and better cost control have driven performance in this sector. The volume decline in northern/central India was lower than expected vis-à-vis southern India, which had stricter lockdowns. [3] Autos - High RM inflation and operating deleverage have impacted most of the results in 1QFY22. OEMs (MSIL, BJAUT, TTMT, and TVS) have reported a commodity cost impact of 3-4pp QoQ.