September quarter corporate earnings so far have staged a negative surprise of about 4%, shows a compilation of latest quarterly numbers by Bloomberg. While the net earnings of the 270 companies that announced their results so far have managed to post a 36% y-o-y growth, a smaller subset shows that the earnings have failed to meet analyst estimates by a smaller margin.
Of the 66 companies for which actual numbers were compared with analyst estimates, as many as 36 — or 56% — posted negative earnings surprise. In the first four weeks of the June quarter earnings season, a similar study showed that 48% of the 48 set of companies posted a negative earnings surprise of 6.5%
“There has been a slight improvement in the negative surprises put forward by the September quarter earnings season compared to the previous quarters. However, this development is in line with broader expectations,” said an analyst.
Nalco, South Indian Bank, Adani Enterprise, Adani Power and Indian Overseas Bank were among the companies that posted the biggest negative surprise in net profit for three months to September compared to the same period last year.
Each of these companies failed to meet the analyst earnings estimates by 35-75%. Even ACC and Cairn India numbers observed negative surprise of the order of 28% and 18%, while other blue chips, including Asian paints, Kotak Mahindra, Hero Motocorp, Dabt and Infosys, failed to meet analyst estimates, albeit with a smaller margin of 0.5-5%.
About 34 of the 66 companies disappointed on the sales even as, on the whole, the topline managed to swing in a 4.5% surprise compared to expectations.
“Volumes of the consumption-driven companies from the auto sector have been affected by a slowing economy. However, such a slowdown was already built in expectations,” said a dealer.
Among the front-line blue chips, Hero Motocorp reported an 11% decline in its net sales, resulting in a 27% y-o-y decline in its net profit that stood at R440 crore for the quarter. Even the volume growth of Hindustan Unilever (HUL) disappointed the Street as the topline at R6,155 crore failed to meet the consensus estimates of R6,260 crore, according to Bloomberg.