TCS to kickstart earnings season on Thursday; all eyes on resilience of India Inc

The much-awaited quarterly result season will start unravelling itself with the first quarter numbers of IT bellwether TCS on Thursday. The companies from various sectors have started publishing their sales volume in April-June and have given revenue indications. The industry was earlier talking about a bloodbath in the first quarter as most of the factories and sales units were shut due to coronavirus outbreak and the resultant lockdowns. But the recent performance updates released by the companies indicate that some of the sectors have been able to survive because of the earlier service/products contracts, export market demands and the steady essential service and products requirements.

In its Q1 performance update, Godrej Consumers Product Limited expects to deliver revenues only marginally lower than Q1FY20. The volume growth is expected to be in mid-single-digit driven by encouraging sales though the production and supply chain are hit by the lockdowns. The lockdown impacted its performance in the early part of the quarter. However, the FMCG company ramped up the production and resolved logistics challenges. The resurgence of household insecticide category continued with strong underlying consumer demand in the domestic market. The firm also witnessed strong momentum in the hygiene category. However, it saw muted demand in hair colour and air freshener.

Tata Motors on Wednesday reported 81.78 per cent dip in its total sales at 25,047 units in the first quarter ended June 30, 2020. The company had sold 1,37,545 units in the April-June quarter of 2019-20.

The steel exports jumped by 145 per cent year-on-year and imports fell by 33 per cent, making India a net exporter of finished steel in Q1 FY21. The finished steel exports increased over two-fold and stood at 3.26 million tonne (MT) compared to 1.33 MT in the same quarter of previous year.

Jindal Steel and Power Ltd on Thursday said its consolidated crude steel output rose 4 per cent to 2.03 MT during the June quarter, thanks to focussed sales in domestic market while increasing the quantum of overseas sales. The export sales contributed 58 per cent to company's total sales volume in Q1.

The analysts expect a 5 per cent quarter-on-quarter revenue fall for TCS in dollar terms with nearly 50 basis points (bps) cross-currency headwinds. Shares of TCS went up 10 per cent to Rs 2,269 in the last one week ahead of its first quarter earnings announcement on Thursday. The EBIT margin decline is expected to be limited to 80 bps QoQ on account of tight cost optimisation like freeze on discretionary spending, reduced hiring, lower travel costs and subcontracting expenses and currency depreciation, a brokerage said. Another IT major, Infosys said the impact on business during the first quarter of the fiscal was lower than the company had anticipated in April.

For incumbent telecom players, Bharti Airtel and Vodafone Idea, the wireless revenues are expected to fall during the first quarter because of lockdown, according to a report by Emkay Global. Bharti and Vodafone are likely to see five per cent quarter on quarter fall in average revenue per unit (ARPU), it said.

Essar Ports said that it has handled 11.23 MT of cargo in the first quarter and it targets a V-shaped recovery. The company's cargo handling had dipped to 2.52 MT in April 2020 but green shoots of economic recovery has resulted in boosting its cargo handling in June 2020 to 4.41 MT.

Realty firm Sobha Ltd's sales bookings fell 37 per cent during the quarter to Rs 487.7 crore, it said. Its sales bookings stood at Rs 777.7 crore in the year-ago period. In the previous quarter, bookings were down 30 per cent from Rs 694.5 crore.

Bajaj Finance said 15.5 per cent of its loan book is under moratorium as of June 30, which was at 27 per cent as on April 30. The NBFC may consider additional accelerated provisioning for COVID-19 in the first quarter to strengthen its balance sheet. The consumer goods financier had provided Rs 900 crore as contingency provision in the quarter ended March. Its deposit book stood at around Rs 20,000 crore as of 30 June, up 32.6 per cent from Rs 15,084 crore a year ago.

The largest private sector lender, HDFC Bank, showed its loan growth hardly slid from the historically healthy double-digit growth even during the first quarter. Year-on-year loan growth remained at 21 per cent. Bandhan Bank said its deposit grew by 6 per cent on a quarter-on-quarter basis to Rs 60,602 crore, and 35 per cent year on year as on June 30. However, loan books of IndusInd Bank and Federal Bank shrunk by 3.09 per cent and 0.89 per cent, respectively, compared to end-March.

Grasim Industries and MRF Ltd recently said its financial performance in the April-June quarter will be impacted by the pandemic and lockdowns. But there is a hope in the stock market, which resulted in the fast recovery.

Also Read: Rs 1.14 lakh crore sanctioned to MSMEs under credit guarantee scheme; SBI, HDFC Bank top lenders

Also Read: 'Boycott China' impact: UltraTech Cement divests entire equity in Chinese cement maker for $120 million