The second quarter of financial year 2021 was one of the best quarters in the last many years in terms of ratio of positive to negative surprises on earnings, though earnings estimates were significantly lowered after the last 2 quarters, according to IDFC Mutual Fund.
Ex Financials, dales saw degrowth of 7 per cent, slightly above estimates while margins beat even most optimistic estimates with EBITDA growing 12 per cent.
Including Financials, profit before tax (PBT) grew 20 per cent and PAT grew 21 per cent. Profit after tax (PAT) year on year is not exactly comparable as base had many one-offs due to the changes in tax rate in the base quarter.
For first half, financials have supported profits with PAT falling 9 per cent overall but down 26 per cent ex Financials. On all accounts even Sales (-20 per cent YoY) were much better than initial estimates when the lockdown started.
While sales growth was in-line better-than-expected demand recovery, continued cost control measures, and lower-than-expected provisioning costs for the BFSI segment drove a spectacular profit beat.
Sales have seen degrowth for five consecutive quarters, including a 32 per cent degrowth in Q1 of this year. This sets a very low base of sales for the next five quarters. Even in Q1, EBITDA fell lower than sales. Four of the last five quarters, EBITDA has done better than sales.
EBITDA Margin for BSE200 ex Financials came at 19.3 per cent, highest since 2011 at least. EBITDA grew 12 per cent year on year led by broad-based margin expansion across sectors. Margin expansion was broad-based across sectors except in consumer discretionary.
Margins expanded on the back of lower discounts across sectors like auto, cement. Significant curtailment was seen in discretionary spends like ad spends, travel. Temporary salary cuts were seen in and temporary reduction in rents in sectors with higher impact like retail, Industrials etc. There was reversal of inventory losses in sectors like Oil & Gas, Metals etc.
