4QFY20 Results Were Muted As Expected

The March-quarter corporate results for earnings coverage universe by brokerage firm Motilal Oswal were weak and muted but largely in line with expectations of the brokerage house.

"Profits declined 22% year-on-year (v/s est. 25% decline) in light of the COVID pandemic and the subsequent lockdown in the last few days of March, which impacted business operations for most companies across sectors. Most sectors reported double-digit declines in profits with Defensives like Healthcare, Technology and Consumer sectors being the only exception.

Corporate commentary was expectedly uncertain and many companies did not provide guidance for 1QFY21/FY21. We continue to see downside risks for our FY21 earnings estimates given the multiple moving parts and uncertain underlying demand backdrop," Motilal Oswal said in its latest report on Q4 results.

According to the brokerage firm, Nifty sales declined 5.1% YoY (v/s est. -10%), while EBITDA/PBT/PAT declined 4.8%/28.6%/20.1% YoY (v/s est. -8.8%/-21.2%/-20%). PAT was dragged by Autos, Oil and Gas (O&G), Metals, Private Banks and NBFCs.

"Of the 18 sectors that we track, 6/1/11 sectors delivered PAT that was above/in-line/below our estimate. Sales for both the Nifty and MOFSL Universe declined for the third consecutive quarter, dragged by Automobiles, Metals, O&G and Cement.

Private Banks' results were below expectation with PBT/PAT declines of 27%/19% on COVID related provisioning. Loan growth moderated across segments for most banks (except HDFCB, which saw strong growth in corporate book) due to the weak macro environment.

Our NBFC Universe's results were also below expectations as PAT declined 32% YoY, mainly due to sluggish AUM growth and COVID related provisioning. BAF was an exception and posted 27% YoY AUM growth in the quarter," Motilal Oswal said in its report.

As regards the consumer sector posted flattish PAT (v/s est. 11.4%) aided by lower taxes, it noted.

"Heavyweights like HUL and Asian Paints' results were below expectations as profits declined 8% and 2% YoY, respectively. Cement sector's results were above expectations as it posted just 5% YoY decline in profits (v/s est. 11% decline). Our Technology Universe posted in-line PAT growth of 1% YoY. Capital Goods too disappointed with 39% YoY decline in PAT," the brokerage house stated.