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Q3 FY 13' Results Analysis

| 2/21/2013 9:00 PM Thursday

Against the buildup of expectations, the results for the December quarter of 2012 have turned out to be a mixed bag. While certain pockets have surpassed street estimates by a huge margin, others have failed to impress. Here is the full picture of what happened...

There is an interesting similarity between the Indian stock market and the corporate results. Though there are 1.8 crore demat account holders in India, the active investors number only a little over two lakh. These two lakh investors generate a majority of the total volumes on the bourses. Similarly, there are a total of 5400 listed companies (BSE and NSE combined) in the country, but only a handful of them have the capability to skew the corporate results either way. 

Here is some empirical evidence to support our assertion. There are only 203 companies in the ‘A’ Group, but these account for more than 84 per cent of the total market capitalisation and 60 per cent of the total average daily turnover on the bourses. More importantly, they account for 70 per cent and 85 per cent of India Inc.’s sales and profits respectively. Thus, though the overall results are undoubtedly important, what is more significant is how these frontrunners fare. This gives a clear snapshot of the quality of earnings and its impact on the sustainability of the broader market.

If the December 2012 quarter financial results of India Inc. are anything to go by, nothing much has changed. On the back of some revival that was seen in the September quarter of 2012, the expectations of what could emerge in the December quarter were quite high. In fact, the results season began on a very strong note, with IT majors putting in better-than-estimated results. However, as they continued to flow in, the results stopped looking that encouraging.

When we look at the final figures, the December 2012 quarter results have been a no-show as compared to our expectations. On a YoY basis, the aggregate topline for the December quarter increased by 7.79 per cent and the bottomline increased by 6.09 per cent. As per our usual practice, we have excluded the results of the PSU oil marketing companies on account of the inconsistent financial performance and the subsidy burden shared by the upstream oil companies on their behalf.

 

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