INSUBCONTINENT EXCLUSIVE:
December quarter earnings threw up no major surprise
But the number of companies that beat estimates was higher compared with that in the previous quarter
JM Financial says the beats-to-misses (BTM) ratio came in at 1.4 against 1.06 in September quarter
At the profit after tax (PAT) level, consumer firms had the worst BTM ratio in December quarter while NBFC and financials had the
best.
Among major revival stories, some 30 companies reported their first quarterly profits in five quarters
Syndicate Bank reported a net profit of Rs 108 crore for the quarter after five loss-making quarters
It logged a net loss of Rs 1,542.54 crore in Q2FY19, Rs 1,281.77 crore in Q1FY19, Rs 2,195.12 crore in Q4FY18 and Rs 869.77 crore in Q3FY18
Shree Renuka Sugars had a similar story
The sugar firm posted Rs 68.60 crore profit for December after making losses for the previous four
Earnings data since December 31, 2017 was considered for this article.
G Chokkalingam, founder, Equinomics Research and Advisory, cautions
Also, one needs to check if the improvement in operating profit was accompanied by an improvement in sales
Only when one gains confidence on the improvement in business matrix, can one enter the stock provided the valuation multiple is
Q3FY19, Punjab Sind Bank also managed to report profit after having reported losses between Rs 100 crore and Rs 550 crore in previous four
In the textile sector, Shri Dinesh Mills, Zodiac Clothing Company, Samtex Fashions, Super Spinning Mills and Jindal Cotex posted their
first profits in five quarters, whereas Omkar Speciality scripted a similar story from the chemicals space.
But do all of them turnaround
stories
Bebabrata Bhattacharjee, Head of Research at CapitalAim, says a single quarter earnings does not make it a turnaround story for a
Among the companies that reported their first quarterly profits after many quarters also included DIC India, Jupiter Infomedia, Satra
Properties, Aplab, SPEL Semiconductor, ARSS Infra, Prime Focus, Sanghvi Forging, Viceroy Hotels, Dhanada Corporation, Brightcom Group,
Wintac, Cimmco, Global Offshore Services and BIL Energy.
Shares of BIL Energy have jumped 21 per cent since January 2018, while others on
the list declined up to 89 per cent during this period.
Stocks like Viceroy Hotels, Omkar Speciality Chemicals, Cimmco, Global Offshore,
Samtex Fashion, Super Spinning and SPEL Semiconductor dipped over 65 per cent between January 1, 2018 and February 15, 2019
If the sales volume increases quarter on quarter (QoQ), then this can be taken as a turnaround or growth story
Investors should check the background of the companies and if the sudden quarterly profit has come from an external source like sale of a
non-core business or forex gains
