Here are some highlights of the report and this quarter's earnings:
- Topline growth (ex-Fin) for Q4 FY22 was 26.7% y/y, while EBIDTA margin contracted by 250bps amid escalating input costs
- Other income (ex-Fin) jumped 7% y/y, thanks to the lower base
- Depreciation rose by 7.5% y/y, while finance costs climbed by 7.2%
- PBT (incl Fin) rose 19.3% y/y basis.
- NII for Financials grew by 13.3% y/y. PPOP grew a meagre 6.2%, mainly impacted by lower Treasury Income. PAT expanded by 50% y/y on the back of lower slippages and higher recoveries
- Interest coverage stood at 6.3x during the quarter, the best in recent past
Sector-wise highlight:
Auto:
- RM inflation impact bottomed out in 4QFY22
- Chip shortage easing but continue to hit US/Europe focused ancillaries
- View - TTMT, AL top OEMs picks - prefer BHFC, MSS in ancs
Banks:
- Lower slippages, strong growth and improved margin show sector is in good underlying health
- Gross slippages were on the lower side for SBI, FED and CSB whereas they were elevated for DCB, RBL, INBK and IIB
Building Materials:
- EBITDA margins to face turbulence!
- We reiterate (i)Greenpanel Industries Ltd, (ii) Apollo Pipes ltd as our top picks from the sector
Capital Goods:
- Enquiry pipeline looks promising
- We remain positive on L&T, APAR, VAMP & KKC
Cement:
- Inflated input cost continues to haunt efficiency
- Trimmed revised earnings estimates; UTCEM, SRCM, DALBHARA offers healthy EBITDA/te visibility
Consumer Staples, Discretionary & Durables / Electricals / Paints:
- Overall, biggest positive surprises came from Tata Consumer, Marico and Varun Beverages while negative surprises came from CCL Products, Bajaj Consumer and Godrej Consumer
- Key positive surprises came from Havells, Blue Star, TTK prestige and Polycab whereas Voltas, Whirlpool and IFB delivered negative surprises
Energy & Chemicals:
- Higher commodity prices impact earnings
- Higher GRMs and plausible marketing inventory gain offset weaker marketing margin
Information Technology:
- Revenue growth momentum remained intact; slight pressure on operating margin
- Our Top picks in the Large cap IT space are TCS, Infosys and HCL Tech; whereas, our top picks in the Midcap IT space are L&T Infotech and Coforge
Infrastructure & Ports:
- Comfortable order book, execution momentum to continue
- GRINFRA, HGINFRA, PNCL and JKIL are our top picks.
Insurers, AMCs, and FinTechs:
- Life insurers see healthy VNB growth QoQ, Revenue yield pressure continues for AMCs
- For coverage asset managers, QAAUM was generally lower and revenue yield also remained under pressure
Pharmaceuticals:
- Input costs spoil the show
- US business under stress due to price erosion, lack of approvals
Real Estate:
- BD necessity for RRE, Annuity assets and Hotels on full recovery path
- Sequentially we are witnessing increasing occupancy for the hotels and there is improvement in the revenue per rooms which is function of steadily increasing average room rent along with contribution from the F&B segment
SFBs, NBFCs & HFCs:
- Sustained recovery in business and asset quality
- Significant reduction in delinquent pool (PAR 0 or 1+ dpd) was seen across product segments with substantial collection of arrears during the quarter - to some extent, the PAR correction was aided by write-offs in Microfinance and this underpinned higher-than-usual credit cost - certain players in vehicle finance and affordable housing reported net provision write-backs
Telecom & Internet:
- Robust increase in ARPU for all 3 telecom operators
- Telecom: ARPU continues to rise, led by tariff hike and improving customer mix |
