Key takeaways from Q2 FY24 earnings: IIFL Capital Services

17 Nov 2023 , 12:33 PM

Sequential PAT momentum was strong in Capital Goods, Defense and Real Estate. Aggregate EBITDA margin was up 5/0 ppt YoY/QoQ. Overall FY24 PAT upgrade for FY25 for BSE 500 was muted at just 0.4% during the results season. Analysts at IIFL Capital Services have replaced HDFC Bank (continued unwinding of substantial concentrated ow in a lone name) with IndusInd Bank from their Large Cap top picks. From their Midcap picks, they have removed Zee (deterioration of outlook) and from their small cap picks they have removed MCX (up 66% since introduction 2 months ago). They have also replaced Shree Cement with Kotak Mahindra Bank from their list of Top Sells.

Sector overview

Banks, Autos, Real Estate, Cement and OMCs reported good set of numbers, while IT saw a muted quarter. FMCG, Retail, Consumer Electricals saw poor volume growth owing to softness in demand. Oil & Gas companies have reported sharp uptick in margins. Overall Debt/EBITDA has improved marginally, with Defense, Automobiles and Travel seeing some reduction while Metals, Retail and Cement see some increases. Overall ROE has also seen only marginal improvement on YoY and QoQ basis, but sectors like OMCs and Travel have expanded sharply while Metals and Chemicals contracted. FMCG volume growth may have troughed.

Earnings change

Aggregate FY25 PAT for BSE 500 saw a muted 0.4% upgrade during the results season. Internet Companies (17%), Fin Serv (8%) and Autos (5%) saw the highest upgrades, while Chemicals (10%), Telecom (3%) and Retail (2%) saw the highest cuts. Zomato, MCX, Torrent Power, and Tata Motors saw some sharp upgrades in FY25 earnings, while ABFRL, V-Mart, Gujarat Fluoro, Tata Chemicals, UPL and Tata Communications saw downgrades.