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India Inc. Puts Behind Pandemic Blues

Most Nifty companies either met or beat estimates for profit and revenue in the quarter ended December, indicating an economic recovery after the pandemic-induced curbs.

All constituents of the 50-stock gauge have declared their third-quarter results. Of these, 33 companies reported net profits higher than the consensus estimates compiled by Bloomberg. As many as 34 firms, out of the 49 for which revenue estimates are available, outperformed.

“Third-quarter results reflect the strong recovery underway in most sectors and further normalisation of operating conditions,” Rusmik Oza, executive vice president and head of fundamental research at Kotak Securities, told BloombergQuint in an emailed response. “Expect net profits of the Nifty 50 Index to grow 20% in FY21 and 25% in FY22.”

Volume recovery in rural and urban markets, price hikes and lower operating costs, among others, aided earnings in the quarter ended December.

The average Ebitda margins of 39 companies—excluding banking, financial and insurance companies—improved to 25.02% in the reported quarter from 21.94% a year ago. That, according to a Yes Securities report, is due to higher realisation on sales, effective cost management, and improving economies of scale supporting Ebitda growth.

Here’s a sector-wise view of the performance of Nifty 50 companies…

Information Technology

  • All five information technology companies on the Nifty 50—Infosys Ltd., Tata Consultancy Services Ltd., Wipro Ltd., Tech Mahindra Ltd. and HCL Technologies Ltd. beat estimates for net profit, aided by broad-based growth across geographies and verticals.

  • The sector’s improved performance was led by mega deal wins by TCS, Infosys, Wipro, and HCL Technologies, suggesting resilience to macroeconomic concerns, Motilal Oswal said in a report. Upbeat commentary and a healthy outlook indicate an acceleration in further spending on technology and the increase in offshoring and automation were the key levers for margin growth in Q3 FY21, the report said.

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Oil & Gas

  • Reliance Industries Ltd.’s net profit rose 12% year-on-year and stood 15% higher than Bloomberg estimates as its expenses and tax liability fell. Yet, analysts expressed concern over transparency as the company stopped reporting its gross refining margin—a critical metric related to refining.

  • Reliance Jio Infocomm Ltd.’s net subscriber addition stood at 5.2 million in the third quarter—less than half of its three-quarter average of 11.87 million. JPMorgan said in a report the company’s operating profit was marginally lower than expectations across all segments.

  • Profits of oil marketers Indian Oil Corp. and Bharat Petroleum Corp. rose amid recovering demand for petroleum products and rising marketing margins.

  • Sales of both companies rose by more than 20% sequentially each, helped by rising domestic demand for transportation fuel that’s almost near-normal levels. According to Fitch Ratings, the oil retailers are likely to report long-term marketing margins above average from 2021-22. That should aid gross refining margins in the short term, partly recover past refinery investments, and fund new investments over the medium term, the brokerage said.

  • GAIL India Ltd.’s net profit rose 20% sequentially as petrochemical prices spiked globally after supply chain disruptions. Oil & Natural Gas Corp.’s, on the other hand, fell 52% quarter-on-quarter amid rising expenses as statutory levies, exploration and finance costs rose.


  • All the automakers on the Nifty 50—Bajaj Auto Ltd., Maruti Suzuki India Ltd., Hero MotoCorp Ltd. and Tata Motors Ltd.—reported profit and revenue better than forecasts. That was supported by festive season push, supply chain normalisation, pent-up demand and preference for personal mobility following the pandemic.

  • Bajaj Auto reported its highest-ever quarterly profit, revenue and Ebitda during the three months ended December—rising 17%, 23% and 27% year-on-year, respectively.

  • Tata Motors’ revenue and net profit grew 6% and 67%, respectively, over the preceding year.

  • Maruti Suzuki’s revenue and net profit grew 13% and 24% year-on-year, respectively.

  • Hero MotoCorp’s net profit rose 23% year-on-year, aided by increased pre-buying in December due to the company’s decision to hike prices in January 2021.

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  • Kotak Mahindra Bank Ltd., HDFC Bank Ltd., and State Bank of India reported profits that were better than analysts’ forecasts. That, according to Yes Securities, was led by stronger disbursements and loan growth, swift recovery in core fees, stable to sturdy net interest margins owing to significant incremental reduction in funding/deposit cost supported the sector earnings in the third quarter.

  • Kotak Mahindra Bank’s earnings were aided by a 16.8% year-on-year increase in net interest income, or core income.

  • Steady asset quality and a 15% year-on-year rise in net interest income helped HDFC Bank beat profit forecasts.

  • SBI’s net profit was above estimates despite an increase in provisions as net interest income rose 4% over the preceding year and other income increased 2.5% year-on-year.


  • While Cipla Ltd., Divis Laboratories Ltd. and Sun Pharmaceutical Industries Ltd. beat analysts’ estimates for net profit and revenue, Dr. Reddy Laboratories Ltd. missed them.

  • Cipla’s revenue and operating profit rose 18% and 62% year-on-year, respectively, aided by increased sales in India and Europe.

  • Divis Laboratories’ net profit rose 31% over the preceding year as it’s venturing into contract active pharmaceutical ingredient manufacturing in a big way for high-volume products.

  • Sun Pharma’s net profit jumped twofold over improved other income and rising sales in India and the U.S.


  • Cement stocks reported better earnings in the third quarter led by increased volumes and recovery in the roads and infrastructure sectors. According to a JP Morgan report, “Improving demand, tight markets (in most regions), cost inflation and better discipline bodes well for pricing trajectory”.

  • Shree Cement’s revenue grew 16% year-on-year led by a 14.7% year-on-year growth in volumes. A 3% year-on-year rise in cost savings boosted its Ebitda growth to 28% over the preceding year.

  • UltraTech Cement Ltd.’s revenue grew 18.5% year-on-year. The company’s “focus on cost reduction, improving the balance sheet health (net debt reduction of Rs 7,424 crore in 9M FY21) and its pan-India presence and leadership position adds comfort”, Centrum Broking said in a report.

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  • The profits of SBI Life Insurance Co. and HDFC Life Insurance Co. fell below estimates.

  • SBI Life’s net profit fell 40% year-on-year to Rs 233 crore dragged by actuarial liability even as premium income rose. Gross premiums rose 18% year-on-year helped by higher renewal of policies.

  • HDFC Life’s net profit grew 6% year-on-year helped by strong renewal premium growth and customer retention. The private insurer, according to a Yes Securities report, deserves premium valuations given its balanced product mix, strong distribution network and group’s track record of delivering healthy performance in all financial segments.


  • The operating profit of steelmakers improved on higher pricing, an improved product mix and lower coking coal costs. Both Tata Steel Ltd. and JSW Steel Ltd. reported net profits that were above Bloomberg estimates.

  • JSW Steel’s net profit rose to the highest in at least 10 quarters following demand recovery in automobiles, infrastructure and construction sectors. Demand recovery offset operational losses at its overseas subsidiaries.

  • Tata Steel’s profitability was aided by higher prices, a better product mix, and initiatives to improve operating efficiency. Its revenue rose to a seven-quarter high even as domestic sales fell 4% over the preceding year as prices of hot-rolled coil steel rose.


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