Q4FY22 Review: March quarter earnings mixed bag – banking, realty, automobile report robust numbers, says brokerage

The March quarter earnings for the financial year 2021-22 (Q4FY22) have been a mixed bag, wherein revenue grew by 18 per cent Year-on-Year (YoY) and profit after tax growth stood at 15 per cent YoY was lower due to margins pressure, YES Securities said in its overall Q4 review report.

Automobile: The raw material inflation impact bottomed out in Q4Y22 in Automobile, as the results for OEM (Original Equipment Manufacturing) (excluding JLR) were operationally better with an EBITDA beat, this was due to contained cost control resulting in fixed cost/sales in the sector.

Banking: Lower slippages, strong growth, and improved margin show the banking sector is in good underlying health, the brokerage said, adding that the gross slippages were on the lower side for SBI, Federal Bank and CSB whereas they were elevated for DCB, RBL, IndusInd Bank among others.

Building materials: Companies had a decent volume growth in Q4FY22 and sequentially, there was a strong pickup as Q3FY22 was benign and as compared to Q4FY21, volumes were flattish which was commendable as Q4FY21 was a record quarter for various companies, YES Securities said.

Capital Goods: Sector witnessed a mixed Q$ primarily for project companies as Covid outbreaks in certain geographies and supply chain constraints impacted execution. Margins remain under pressure, driven by a steep rise in commodity inflation and freight cost.

Cement: Inflated input cost continues to haunt the efficiency of cement companies, the volumes mostly remained flat over a weak base, as demand was impacted due to extended rains and ongoing election during Q4FY22. During Jan-Mar’22, PAN India cement price hiked by Rs10-15/bag.

Consumer Staples, Discretionary: Q4FY22 delivered a mixed performance with high single-digit revenue growth and low to mid-single-digit volume growth on a high base while margins declined due to elevated inflation in commodities.

Energy & Chemicals: Higher commodity prices impacted the sectors’ earnings, the Q4FY22 was marked by sequentially higher crude oil prices; depreciation in INR; high global spot LNG prices; QoQ improvement in Singapore benchmark GRMs and the domestic petroleum consumption.

Information Technology: The sector’s revenue growth momentum remained intact; slight pressure on operating margin was seen due to supply-side constraints. The Pandemic has accelerated the adoption of digital technologies among enterprises and that is visible in robust deal wins.

Infrastructure and Ports: Comfortable order book, execution momentum to continue for the sectors. During 4Q, the sector posted a healthy double revenue digit growth as economic activity picked up and ramp up in execution across under construction portfolio was witnessed.

Pharmaceutical: Input costs in the form of higher API, solvent, and freight prices YoY had an impact across the sector. Increased costs coincided with a weak seasonality sequentially in India’s business. Most companies appear guarded on the 1Q/H1FY23 gross margin outlook as input costs still higher.

Real Estate: All companies reported best-ever pre-sales volumes for a year in the residential history segment on the back of robust demand. Brokerages believe that companies with an established track record will continue to see demand for their products due to supply-side constraints.