The first quarter pre-existing (pre-ex) earnings were flat and failed to live up to the expected 8 percent growth, with financial earnings being a key disappointment, global brokerage firm CLSA has said in a report.
"Of the 114 results compiled from our India coverage universe, 36 percent (ie, 41) were below our expectations, while 15 percent were in-line and 49 percent were above [expectations]," added the report.
The brokerage also said that the positives were few given the slowing economy. Cement companies reported good results despite weak volumes while margin performance was strong with a record Ebitda (earnings before interest, tax, depreciation and amortization) margin.
It added: “For now, select discretionary companies have escaped the weaker consumer sentiment. These included property developers, paint companies, building materials, and consumer appliances. While IT results had some margin pressure, corporate commentary on demand was positive with companies mostly expecting current 10 percent constant currency revenue growth.”
Pharmaceutical companies reported a positive trend with seven of the ten pharma stocks reporting results that exceeded estimates. The India business saw improved results with India numbers not being as bad as feared, the report added.
Among the negatives, auto sector results were weak, the report noted. Larger disappointments were seen in automobile companies as the cyclical downturn hit their global business as well.
The research house believes that the corporate banks, including Axis Bank, and the State Bank of India (SBI), reported much improved profitability but somewhat below expectations due to higher credit costs.ICICI Bank, and insurance companies (HDFC Life, ICICI Prudential Life) were the company that gave better results among the financial firms.