India Inc posts good report card on festive rush, rising commodity costs

Festive fervour, a pointy rise in commodity costs, a base impact and stupendous performances from IT majors have mixed to make for a great Q3FY21 report card. Earnings season so far has been filled with surprises with most firms beating Street estimates. Unlike in Q1 and Q2, this time round virtually all firms have grown their revenues well, some by pushing by means of larger volumes however many by taking value will increase to move on the upper value of inputs.
Thanks to rising metal costs globally and a pick-up in native demand, JSW Steel reported a 21 per cent year-on-year rise in revenues. At Ultratech, volumes have been up 14 per cent y-o-y on the again of demand from rural and concrete housing and government-led infrastructure. Bajaj Auto cashed in on an 8 per cent y-o-y enchancment in internet common promoting costs. Again, volumes at Asian Paints jumped an astonishing 33 per cent y-o-y, pushing up revenues by practically 27 per cent on-year on the again of each pent-up and festive demand.
Again, a number of bigger organised sector firms have been in a position to remove enterprise from smaller gamers whose provide chains have been disrupted. Even although they got here off a low base, revenues at Havell’s rose a outstanding 39 per cent y-o-y as the corporate gained market share from smaller gamers. The headline numbers, for a pattern of 184 firms (excluding banks and financials) although, are skewed by the steep 22 per cent y-o-y fall within the revenues of Reliance Industries (RIL) .
Even as revenues rose, firms continued to chop prices and that aided margin growth. Bajaj Auto, as an example reported a 27 per cent y-o-y enhance ebitda because it optimized mounted value and spent much less on worker prices. Thanks partly to raised value controls Avenue Supermarts was capable of develop EBITDA margins by 2 bps y-o-y. With expenditure contracting greater than the autumn in revenues working revenue margins for a similar expanded 500 bps y-o-y. To make sure a giant bounce in different earnings additionally boosted earnings.
Retailers have been among the many worst hit publish the pandemic however, with retailer operations nearing normalcy, Avenue Supermarts bounced again to publish a great enhance in revenues of 10 per cent y-o-y with demand for common merchandise choosing up. Discretionary spends, nevertheless, don’t appear to have seen as sharp a restoration. At Shoppers’ Stop, footfalls have been down 50 per cent y-o-y leading to a fall in revenues of 32 per cent y-o-y though most of the restrictions had been eased.
The IT pack placed on a spectacular present posting robust revenues and margins on the again of strong spending by shoppers, a ramping up of huge offers and what analysts are calling a ‘budget flush’.
Managements sound assured they’ll sustain the great work given the large deal wins they’ve seen. Infosys has raised FY20-21 income steering to 4.5-5 per cent from 2-3 per cent earlier; CEO Salil Parikh mentioned the corporate was gaining market share in a rising pie. In 1 / 4 wherein it took wage hikes, TCS reported robust EBIT margins of 26.6 per cent. FE