InvestorQ : How have the results of the June quarter been so far because I have been hearing that this is the worst quarter in many years?
sara Kunju made post

How have the results of the June quarter been so far because I have been hearing that this is the worst quarter in many years?

Answer
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1 year ago


You are right that this has been one of the worst quarters in the last 3 years with most sectors doing worse than expected. Out of the Nifty companies nearly 23 companies did worse than expected. Here is a quick sector update of the results announced till date.

· Auto and auto ancillaries had a tough quarter with most manufacturers only focusing on cutting down dealer inventories and even going slow on production. Apart from Hero Moto, all the other auto companies gave weaker than expected results. In the ancillary space, companies like Jamna and Minda have shut factories to bring down inventories.

· Aviation stocks were a slight positive surprise but that was more because Spice and Indigo benefited in a big way from Jet Airways shutting operations in April. Passenger growth came back to positive after a long gap.

· Most PSU banks including SBI disappointed. Only HDFC and ICICI Bank managed to meet their growth and margin estimates. Banks across the private and PSU space have seen deterioration in asset quality.

· Cement was again a rare exception with higher cement prices and lower input costs helping them. Most cement companies benefited from regional and seasonal shortages giving a boost to cement prices.

· FMCG was another major disappointment with most FMCG companies other than Nestle reporting lower than expected growth. FMG companies took a hit on the back of weak rural consumption.

· Most IT companies experienced pressure on profits despite growth in top line. This pressure came from more work outsourced abroad and recruitment of local personnel leading to higher costs for these IT companies.

· Metals took a hit across the board. Steel took deep cuts after they faced falling global steel prices and rising input costs of ore. Steel companies are dependent on Chinese demand for determining prices. Hindalco got some respite from the Novellis performance.

· Telecom stocks were relatively mixed as Jio continued to grow to become number one even as it saw consistent fall in ARPUs. Vodafone continued to bleed with another reported loss of nearly Rs.4800 crore and losing subscribers

· Most realty companies saw growth I profits but that was largely on the back of change in accounting standards. The liquidity crunch and the pressure on NBFCs also contributed to weak profitability of these realty companies.

The first quarter results have been weak but what is more concerning is that the downgrades by analysts and the rating downgrades by raters have shown a rising trend.