Internal Meeting Notes on Q1Fy21 Results-
India Inc reported weak Q4Fy20 earnings due to disruptions caused in operations due to Covid-19 pandemic and weak demand acted as a catalyst for lower earnings growth. The guidance for Q1Fy21 by most of the companies had been cautious due to the lockdown of states for a prolonged time. Major equity indices around the globe have gained back from the lows seen in March - April 2020 period as the countries have eased lockdown norms.
Q1Fy21 earnings show had started with IT pack reporting the first trends of earnings season. TCS reported de-growth of 8.2% (Q-o-Q) & 6.3% (Y-o-Y) in top-line in constant currency terms and 14% (Y-o-Y) fall in net profit. Operating margins contracted by 150bps to 23.6% during the quarter. On segment-wise revenues, BFSI witnessed a flattish growth of 0.5% on a sequential basis and Life Science reported 13.88% (Y-o-Y) growth during the quarter. Management of TCS mentioned that the Covid-19 impact has bottomed out and expects growth in the coming quarters. On a contrast note, Infosys & Wipro reported better than expected result, and revenue guidance remained tepid. Infosys reported 1.7% (Q-o-Q) growth in constant revenues and 9% (Q-o-Q) growth in operating profit, operating margins expanded by 150 bps to 22.7%. Management of Infosys stated constant currency revenue growth to be at 0%-2% for Fy21 and margins at 21%-23%. Wipro reported a 5.3% (Q-o-Q) drop in revenues, operating profits rose by 1.3% (Q-o-Q) and IT margins expanded by 290 bps to 19%. Affle India reported 23% revenue growth and 43% net profit growth. Ebit margins declined to 11% from 27%.
On the finance sector front, NPA levels have remained constant/de-growth due to moratorium offer, however, a spike in NPA levels is expected once moratorium offer is lifted. As per RBI data, 50% of total banking industry outstandings are under moratorium. HDFC Bank reported a 20% (Y-o-Y) jump in net profit, net interest income (NII) rose by 18% (Y-o-Y) and net interest income margin stood at 4.3% during the quarter. Gross NPA levels for HDFC Bank stood at 1.36% compared to 1.40% reported during the same quarter last year, 48% (Y-o-Y) rise in total provisions due to possible increase in defaults going forward. NBFC major Bajaj Finance reported 19% (Y-o-Y) fall in net profit due to higher provisions during the quarter and revenues rose by 14% (Y-o-Y). NII growth reported at 12% (Y-o-Y) and gross NPAs stood at 1.40% compared to 1.60% reported during the same quarter last year. ICICI Bank reported 36% (Y-o-Y) rise in profits due to 4% stake sale in ICICI Lombard & 1.5% stake sale in ICICI Prudential for a total amount of Rs. 30 billion. Revenue from operations increased by 22% (Y-o-Y) and NPAs stood at 1.41% compared to 1.77% reported during the same quarter last year and NII growth reported at 20% (Y-o-Y). Axis Bank reported 20% growth in NII and NPA level stood at 1.23% compared to 2% during the same quarter last year. Net profit declined by 19% (Y-o-Y) due to higher provisions. SBI reported 81% (Y-o-Y) rise in net profit due to one-off gains on account of stake sale from SBI Life Insurance, NII rose by 16% (Y-o-Y), bad loans provisions fell by 19% (Y-o-Y) and Net NPA ratio stood at 1.88%.
FMCG giant Hindustan Unilever (HUL) reported revenue growth of 4.3% (Y-o-Y) due to a 7% decline in volumes. EBITDA fell by 0.1% (Y-o-Y) and margins declined by 120 bps to 25% during the quarter. Britannia reported 26% (Y-o-Y) growth in revenues, 118% (Y-o-Y) growth in net profit, and EBITDA rose by 82% (Y-o-Y). Avenue Supermart reported 87% (Y-o-Y) plunge in net profits and revenues declined by 33% (Y-o-Y). Margins contracted by 450 bps to 1%, due to lockdown restriction in many parts of the country impact revenues for the company. Nestle India reported 1.7% (Y-o-Y) growth in revenues, EBITDA growth of 5% (Y-o-Y) and net profit growth of 11.2% (Y-o-Y). During the lockdown, Nestle India saw demand sustain for products such as Maggi noodles, dairy whiteners, packaged milk, and coffee. E-commerce sales for Nestle India witnessed high double-digit growth.
Domestic automakers witnessed the steepest fall in sales figures due to the lockdowns across the domestic & global markets as to dealerships being closed for large parts of the quarter. Automakers had witnessed a near-complete washout in April & May. Sales slightly improved in June as restrictions eased. Bajaj Auto reported 53% (Y-o-Y) fall in net profit, 60% (Y-o-Y) drop in revenues, and EBITDA margins contracted to 13.3% from 15.4% during the same quarter last year. Net sales volume declined by 61% (Y-o-Y) as the domestic sales during the month of April were nil and an uptick in sales is witnessed in the month of June 2020. Overall Bajaj's share in the domestic motorcycle market was 20.7% compared with 18.5% in FY20. In the commercial segment, its share in the domestic market fell to 42.6%. Maruti Suzuki reported 79% (Y-o-Y) decline in revenues and a net loss of Rs. 2.4 billion, however, lower operating expenses helped to stem losses to some extent. Tata Motors reported a 48% (Y-o-Y) decline in revenues, operating profit slumped by 79% (Y-o-Y) and net loss for the quarter stood at Rs. 84 billion. Endurance Technologies reported net loss compared to a profit of Rs. 1.65 billion during the same quarter last year and revenue down by 68.4%. HeroMoto Corp net profit declined by 95% (Y-o-Y), revenue drop of 63%(Y-o-Y), and companys market share during the quarter stood at 34.6%, a gain of 333 basis points (bps) (Y-o-Y). Eicher Motors reported net loss and revenue down by 65.7% (YoY).
L&T reported 69% (Y-o-Y) drop in net profits and 27% (Y-o-Y) fall in revenues. Revenue was impacted by nation-wide lockdown, resulting in halting of manufacturing and construction activities. L&T bagged orders worth Rs. 235 billion at the group level during the June quarter registering a decline of 39% (Y-o-Y), in a quarter characterized by low interest towards fresh investment and deferment of award decisions. International orders during the quarter at Rs. 88 billion constituted 38% of the total order inflow. Reliance Industries reported 44% (Y-o-Y) fall in revenues, operating profit fell by 21% (Y-o-Y). Revenue from refining and Petro-chemical business declined by 54% (Y-o-Y) & 33% (Y-o-Y) respectively. Bharat Petroleum Corporation reported net profit growth of 25.4% and revenue growth declined down to -41.1% (YoY) at Rs. 509 billion.
JSPL reported a consolidated net revenue fall of 7% year-on-year during Q1FY21. Consolidated Ebitda increased by 10% from the same quarter last year. The company's steel production rose by 4% during Q1FY21 and has recorded sales of 2.07 million tonnes. Hindalco Industries reported Q1 net loss against a profit of Rs 0.23 billion in a year-ago period. Revenue of the company was down 26.2% YoY and EBITDA was down 20.2% and the margin was at 7.7%. Grasim Industries reported a decline in consolidated net revenue by 32.2% (YoY) and consolidated net profit slumped 67%. Tata Steel reported net loss of Rs. 46 billion which is 3rd straight quarter of net loss and revenue declined by 32.4% (YoY). UK business of Tata Steel is awaiting for support from local government as a part of the pandemic stimulus package which would help to stem the loss.
Cipla reported 9% revenue growth, 16% EBITDA growth, EBITDA margins improved by 145 bps, and net profit 21% up. India business for Cipla up by 16%, South Africa market 24% up, and US markets 14% (q-o-q). zero debt company as of June 2020. Continued to deliver better than market growth despite COVID-19 issues. Lower expenses improved margins and profitability. Granules India reported a growth of 34% (Y-o-Y) in net profit and revenues increased by 23.5% (Y-o-Y). Management of Granules mentioned that optimization of product mix, increased capacities and optimal capacity utilization helped to improve margins during the quarter.