The June quarter for Nifty50 companies continued to be muted witnessing an impact of weak demand, slow private sector capital expenditure, liquidity tightness, and global trade issues.
Of the Nifty 50 companies, eight have reported numbers above expectation, 11 have reported results in-line with expectation, 15 have reported a mixed set of numbers and 16 have reported numbers below estimates, said a report by Centrum Broking.
According to the report, the revenues for most automobile and FMCG companies were impacted by muted volumes owing to low discretionary spends, rupee fluctuation, slow progress of monsoon and delayed private sector capex.
Some other companies (in non-banking, financial services and insurance (BFSI)) reported lower profitability on account of margin pressure given the slower than expected revenue growth, high costs and discounts (in case of auto companies). However, lower commodity prices/crude oil gave some respite (although not for metal companies), it added.
The report notes that the BFSI segment has been a clear driver for this quarter’s earnings, helped by low base effect of previous years when banks did aggressive provisioning as part of major asset cleanup exercise. Despite moderate asset quality, fresh slippages (exposure to stressed groups) and higher provisioning, the BFSI segment witnessed net profit growth of over 149.9 percent year-on-year, it added.
The slowdown was witnessed in the non-BFSI segment as net sales of 40 non-BFSI (out of Nifty 50 companies) grew by 5.9 percent Y-o-Y while net profit declined by 11.6 percent, according to Centrum.
"Net interest income (NII) of 10 BFSI (out of Nifty 50 companies) grew by 14.3 percent Y-o-Y, whereas net profit grew by 149.9 percent. Q1FY20 witnessed a turnaround in the performance of State Bank of India and ICICI Bank," the report said.
In the BFSI segment, Bajaj Finance was yet again the top performer in NII terms (for the sixth consecutive quarter). In net profit terms, ICICI Bank reported a profit of Rs 1,908 crore (versus a loss of Rs 120 crore in Q1FY19), owing to an improvement in asset quality, a decline in stressed assets and better subsidiary performance.
In addition, the State Bank of India (SBI) also reported a profit of Rs 2,312 crore (against a loss of Rs 4,876 crore) although, on an overall basis, results were lower than expected, given higher slippages.
Indiabulls Housing Finance was the only stock that reported negative NII growth. Meanwhile, YES Bank’s profitability was impacted given the higher provisioning for bad loans.In the non-BFSI segment, the top-performing companies were UPL and UltraTech Cement, according to the brokerage. The current challenges faced in the auto sector impacted numbers of Maruti Suzuki which was the lowest performer in terms of net sales and Tata Motors which reported a loss for the quarter.