EUR 350.00 For Business Accounts Only

MOSL: VOICES | INDIA INC ON CALL: Demand seeing an improvement; RM price inflation a concern

VOICES | India Inc on Call: Demand seeing an improvement; RM price inflation a concern

 

In this report, we present detailed takeaways from the 2QFY22 conference calls as we refine the essence of India Inc's 'Voices'.

• Corporate earnings for 2QFY22 came in above MOFSL's expectations, led by commodities such as Metals and Oil and Gas. Excluding these two sectors, aggregates were in line. The two important trends that came to the fore are: a) an improving demand environment after the opening up of the economy and the rising pace of vaccinations, and b) the impact of higher input costs on operating margins. The operating margins of Specialty Chemicals, Autos, Cement, and Consumer Staples contracted. For MOFSL's Coverage Universe, the earnings upgrade-to-downgrade ratio for FY22 stands at nearly 1:1 as 51 companies saw earnings upgrades of over 5%, while 55 companies were downgraded by more than 5%. Management commentaries indicated an improvement in the overall demand scenario, albeit with caution around operating margins, given the inflationary input price environment.
• Most Banks reported a steady recovery in loan growth, led by the Retail and SME and Business Banking portfolios. The Corporate book was largely muted as the capex cycle would still take time to revive. Banks indicated the growth momentum is likely to continue during the festive season. Banks expect a further improvement in collection efficiency, which would enable moderation in slippages in 2HFY22. Banks expect the growth momentum to remain healthy, while the asset quality outlook should continue to improve.