Election results and increasing number of corona virus cases are expected to set the tone for the markets in the near term along with the quality of earnings this season. Indeed, the way the markets have behaved both locally and in the developed world has got investors spellbound. The earnings in the US markets have been more than impressive with stocks such as Amazon, Tesla, Facebook and Google continuing to report above average growth. The US economy is expected to deliver more than 7 per cent GDP growth in FY22 while the recovery in European economies stands to be impressive, especially that of the UK. Chinese economy has also rebounded impressively enough to create optimism and allow the equity prices to remain in the green.
The Indian economy is also expected to deliver higher than 10 per cent GDP growth in FY22, thus giving hopes to long-term investors. While low interest rates, expected economic rebound globally, record GST collection, heightened economic activity in March 2021 are the factors helping the risk on mode to be active, in reality true optimism is infused by superior earnings this season as well. On the earnings front, after two stupendous back-to-back earnings’ seasons, the analyst community was not very excited about the prospects this season. However, the quality of the earnings has been more than satisfactory this season, so far.
If we talk about the Sensex companies that have declared their results till now, only HCL Technologies has been a disappointment. RIL, HUL, Titan, Axis Bank, Bajaj Finance, Bajaj Finserv, ICICI Bank, Maruti Suzuki and Tech Mahindra were able to declare positive results this season. The results of Maruti Suzuki are a reflection of what is happening on the ground. The revenues increased for the automaker indicating that there is latent demand for the products. However, the EBITDA margins decreased, underlying the fact that the rising commodity prices have started to hurt profit margins for automakers. Indeed, the rise in commodity prices is something that has caught manufacturers off-guard.
However, the alarm button is not being pressed yet as the demand situation is healthy and there is increasing demand even at higher prices for the products. Experts believe that there is nothing to worry about as far as the demand scenario is intact. They fear a situation when there is a drop in demand due to multiple regional lockdowns that threatens to disrupt the supply chain of manufacturers and automakers, forcing manufacturers from various industries to struggle to maintain reasonable margins. Such a situation may destroy wealth in the near to medium term.
Ultratech Cement was one of the star performers amongst the Sensex constituents that managed to impress with its Q4 results this season. In the cement space, Dalmia Bharat remained one of the top performers this season with outstanding results. Gujarat Ambuja Cement and ACC Limited were amongst the cement manufacturers that impressed with the Q4 results this season. In the pharmaceutical space, Laurus Labs stood out as one of the best performers, continuing its growth trajectory from the previous two seasons. Ajanta Pharmaceuticals and Syngene International are amongst those pharmaceutical companies to have declared positive results this season.
UTI AMC and ICICI Securities in the financial space managed to impress with their earnings while Rain Industries, Sundaram Clayton and KPR Mills managed to deliver a superior performance during this period. In the small-cap space, some of the impressive performances came from Kirloskar Pneumatic, Tata Coffee, Mastek, Swaraj Engines, Tinplate Company, KSB Pumps, Gateway Distripaks, Schaeffler India, National Standard, India Bulls Real Estate and Filatex India.
The Q4 results of FY21 for the pharmaceutical sector companies have been attractive. Considering the key players in this sector, in the fourth quarter of FY21, Divis Laboratories posted a strong increase in net sales of 21.86 per cent whereas Alkem Laboratories recorded an increase of 6.24 per cent in net sales. On the other hand, Glenmark Pharmaceuticals reported an increase of 4.55 per cent and Cadila Healthcare registered a rise of 4.51 per cent in net sales. While Divis Laboratories posted an increase in operating profit by 32.67 per cent, Alkem Laboratories recorded operating profit with an increase of 30.01 per cent. Cadila Healthcare and Glenmark Pharmaceuticals posted a rise in operating profit of 16.23 per cent and 15.25 per cent, respectively.
The greatest rise in net profit was clocked by Cadila Healthcare which was 40.64 per cent followed by Divis Laboratories which registered a gain of 31.06 per cent and Glenmark Pharmaceuticals and Alkem Laboratories which recorded rise in net profit by 30.05 per cent and 18.06 per cent respectively. It is expected that the pharmaceutical sector will remain a hotspot for investors this year as well. The domestic market has already witnessed a huge rally across pharmaceutical sector stocks, but considering the crucial health crisis the country is in, a huge demand can be sensed for medicines and health-related products and infrastructure. Moreover, faster approvals are expected to be obtained for new drugs, foreign partnerships, etc.
The fourth quarter of the fiscal year is usually the best quarter for cement companies and given the robust YoY volume growth expected due to low base of Q4FY20, this quarter is expected to be no different. Demand across various segments like rural housing, affordable housing and infrastructure was buoyant during the quarter and most cement companies operated at full clinker utilisations across the northern, central and western regions, thereby providing operating leverage. The southern region reported positive demand growth after reporting contraction for a long time.
Continue reading your story on the app
Continue reading your story in the magazine
The Art Of Selecting A Financial Product
Most people invest with little or no in-depth analysis or study. What are the factors that must trigger your investment? The article provides guidelines from an investment product perspective and can be used for buying any financial product, including your insurance. Keeping all these points in mind while selecting your financial product will help you to improve your chances of generating wealth
The Facts & The Fine Print
Most of us buy life insurance driven by the need of the hour, especially when it is time to get the benefit of tax exemption or in cases like the present one when the world has been gripped in the clutches of the pandemic. This is not an ideal scenario. You must understand the nitty-gritty of an insurance policy before investing in one. The article shows the way
Technology Adoption Key To NBFC Success
After a tough period of survival, the NBFCs are back in the reckoning with improved system liquidity and strong capital buffers that have helped majority of NBFCs to disburse loans
Markets on a Steady Ascent
The current scenario has proved to be a golden opportunity for investors investing in low-risk, high-growth and quality mid-cap and small-cap stocks
Rainwater Harvesting: Need Of The Hour
It is said that World War III will not be fought for geographic dominance but solely on the basis of water. This may sound far-fetched to citizens of more developed countries. However, in India there are already daily battles being waged by areas, projects and individuals for access to this precious resource during summers, writes Santhosh Kumar, Vice Chairman, ANAROCK Property Consultants
Global Markets On A Roll
While the current rally is too fancy to last for long, cautiousness about sharp corrections may create a volatile stretch until the next earnings seasons
Cotton Weaves Its Way To The Top
Meanwhile, concerns about increasing inflation hovering on the horizon and also the strengthening of the rupee led the gold prices to trade strong in the domestic market
Are Quant Funds Worth The While?
In this article, we will focus on defining quant funds, how they work and whether or not you should have them in your investment portfolio.
Small-Cap Small In Size, Big In Gains
With the Nifty touching all-time highs and surprising market participants with tremendous gains in 2020 and 2021 alike, it is the category of small-cap stocks that is actually making a difference in an investor’s portfolio by not only outperforming Nifty in the past one year but by also delivering a broad-based market rally, thus allowing a majority of the investors to book profits. Yogesh Supekar highlights the trend in the smallcap universe while also focusing on the top-quality performers in the small-cap space
Finding A Way To ‘Heavenly' Profits
Riding on the digital wagon that has influenced equity investing among the millennials, the company has been able to garner 398 million digital impressions in June 2020 on various online and digital platforms through the application of digital marketing. Its customer outreach spans across approximately 96.87 per cent or 18,649 pin codes in India as of June 30, 2020, which is evidence enough of its growth curve