India Inc earnings: Upgrades aplenty, however margins a priority

It’s been a splendid earnings season with surprises outnumbering disappointments and prompting analysts to improve earnings estimates for a good variety of firms. On a tough reckoning, brokerages have upped FY22 revenue estimates for a minimum of 50 per cent of the businesses they monitor. That’s not stunning as a result of administration commentary on demand has been fairly optimistic; order books are filling up, motels and malls are open and journey has resumed. In all this, inflation stays an enormous concern.
The traits which might be comforting analysts embody the massive hiring plans of IT companies, the robust property gross sales, the pick-up in volumes at FMCG companies and the strong improve in residence loans. Indeed, the rebound in actual property is sweet information for the economic system.
The issues are the scarcity of key elements plaguing the auto sector, the rising price of vitality, enter inflation basically and the excessive attrition at IT companies. While the revival in client demand has been pretty robust, not all firms have been capable of cross on the upper prices; that has pressured margins.Several firms have talked of the necessity to increase costs to have the ability to cross on the upper price of inputs.
Revenues within the September quarter grew effectively, albeit with the assistance of a low base; for a pattern of 1,853 firms (excluding banks and financials), they had been up 33 per cent y-o-y, a superb a part of it helped by commodity inflation.
At the identical time realisations improved for a variety of products. Net standalone revenues at Mahindra & Mahindra had been up 15 per cent y-o-y on the again of a superb ASP (common promoting worth).
However, rising uncooked materials prices brought on some injury, up 430 bps y-o-y; working margins for the pattern contracted 57 bps. fe