Just Rs 999: 1-year pack + offers

Journalism of Courage
Advertisement
Premium

India Inc earnings: Upgrades aplenty, but margins a concern

The concerns are the shortage of key components plaguing the auto sector, the rising cost of energy, input inflation in general and the high attrition at IT firms.

India inc, Mahindra, FMCG firms, FMCG, India news, Indian express, Indian express news, current affairsIndustry executives said that FMCG companies have already hiked product rates in recent times due to elevated commodity prices to the extent possible without risking demand and are covered at least for the next three months due to long-term contracts. (Representational)

It’s been a splendid earnings season with surprises outnumbering disappointments and prompting analysts to upgrade earnings estimates for a fair number of companies. On a rough reckoning, brokerages have upped FY22 profit estimates for at least 50 per cent of the companies they track. That’s not surprising because management commentary on demand has been reasonably optimistic; order books are filling up, hotels and malls are open and travel has resumed. In all this, inflation remains a big concern.

The trends that are comforting analysts include the big hiring plans of IT firms, the strong property sales, the pick-up in volumes at FMCG firms and the robust increase in home loans. Indeed, the rebound in real estate is good news for the economy.

The concerns are the shortage of key components plaguing the auto sector, the rising cost of energy, input inflation in general and the high attrition at IT firms. While the revival in consumer demand has been fairly strong, not all companies have been able to pass on the higher costs; that has pressured margins.
Several companies have talked of the need to raise prices to be able to pass on the higher cost of inputs.

Revenues in the September quarter grew well, albeit with the help of a low base; for a sample of 1,853 companies (excluding banks and financials), they were up 33 per cent y-o-y, a good part of it helped by commodity inflation.

Subscriber Only Stories

At the same time realisations improved for a range of goods. Net standalone revenues at Mahindra & Mahindra were up 15 per cent y-o-y on the back of a good ASP (average selling price).

However, rising raw material costs caused some damage, up 430 bps y-o-y; operating margins for the sample contracted 57 bps. fe

First published on: 15-11-2021 at 00:47 IST
Next Story

Surat assistant head constable held for taking Rs 5,000 bribe

Home
ePaper
Next Story
close
X