India Inc.'s profitability moderated in the December quarter of the financial year 2022-23 (Q3FY23) due to higher commodity prices, however, financial and auto firms performed better during the quarter under review.
With the Q3FY23 reporting season over, let's take a look at Ambit Capital’s biggest earnings per share (EPS) upgrades/downgrades of reporting season amongst NSE200.
FY23 Upgrades
Ambit's biggest FY23 EPS upgrades include BPCL (99 percent), Tata Motors (98 percent), Oberoi Realty (56 percent), ACC (21 percent), and Dalmia Bharat (16 percent).
BPCL: As per the brokerage, the BPCL upgrade is driven by favorable macros in Q3FY23 leading to marketing profits despite stagnant retail fuel prices. In the December quarter, the firm reported a consolidated net profit of ₹1,747 crore, down 36 percent from ₹2,579 crore reported in the same quarter last year. Meanwhile, its revenue from operations rose 13 percent to ₹1.33 lakh crore in the three months ended December, compared with ₹1.17 lakh crore in the last-year period. The stock has fallen 12 percent in the last 1 year. In 2023 YTD, it is down around 4 percent.
Tata Motors: Better-than-expected average selling price at JLR and EBITDA Margin for the domestic commercial vehicle (CV) business as the industry shifts from demand push to pull mode drove Tata Motors upgrade, said Ambit. In the December quarter, the auto major was back in the black after 7 quarters, as the company posted a consolidated net profit of ₹2,958 crore against a loss of ₹1,516 crore a year ago. Consolidated revenue from operations rose 22.5 percent YoY to ₹88,489 crore. EBITDA rose 11 percent on year to ₹9,900 crore and the margin improved 90 basis points to 11.1 percent. The stock has lost 12 percent in the last 1 year but is up 11 percent in 2023 YTD.
Oberoi Realty: According to the brokerage, Oberoi Realty's upgrade factors better revenue recognition amidst multiple projects hitting completion milestones. In the December quarter, Oberoi Realty reported a 50.27 percent jump in its consolidated net profit to ₹702 crore versus ₹467 crore in the year-ago period. Its total income also surged 95 percent to ₹1,651 crore as against ₹846 crore in the same quarter last year. The stock has fallen over 4 percent in the last 1 year and around 2 percent in 2023 YTD.
ACC: The cement major's upgrade was driven by lower-than-expected freight cost/t along with higher fixed cost absorption, resulting in higher unitary EBITDA, stated Ambit. The cement maker reported a 60 percent YoY decline in net profit at ₹113.19 crore in Q3FY23. Revenue rose 7 percent to ₹4,537 crore versus ₹4,226 crore in the year-ago period. The stock lost 16 percent in the last 1 year and nearly 30 percent in 2023 YTD.
Dalmia Bharat: The firm's upgrade was due to fuel cost savings, however, going ahead these savings may end up fleeting as the law of averages catches up, highlighted Ambit. The company's consolidated net profit from continuing operations surged 142.9 percent to ₹204 crore in Q3FY23 as against ₹84 crore posted in Q3 FY22. Its revenue from operations also increased 22.7 percent year on year to ₹3,355 crore in the quarter ended 31 December 2022. the stock rose 10 percent in the last 1 year but is up just around 2 percent in 2023 YTD.
FY23 Downgrades
Meanwhile, Ambit's biggest FY23 downgrades include Zomato (-150 percent), Indus Towers (-80 percent), ABFRL (-68 percent), Lupin (-66 percent), and Voltas (-58 percent).
Zomato: As per the brokerage, Zomato’s downgrades were due to weaker food delivery growth driven by weaker orders and MTU (monthly transactional users) growth. In the December quarter, Zomato's consolidated net loss widened to ₹347 core compared with a loss of ₹63 crore a year ago and ₹251 crore a quarter ago. However, its consolidated revenue from operations surged 75 percent YoY to ₹1,948 crore. The stock has fallen 32 percent in the last 1 year and is down around 8 percent in 2023 YTD
Indus Towers: The firm's downgrade is led by VIL’s funding constraints weighing on Indus’ ability to grow dividends and telcos' focus likely on loading and fabrication instead of new tower additions, stated Ambit. In Q3, Indus Towers suffered a ₹708 crore net loss versus a net profit of ₹1,571 crore a year ago, mainly due to a provision for the doubtful debt of ₹2,201 crore and an exceptional charge of ₹493 crore. In Q3FY23, the company's revenues were down 5 percent YoY at ₹6,765 crore. The stock fell 35 percent in the last 1 year and around 12 percent in 2023 YTD.
ABFRL: According to Ambit, the downgrade in ABFRL was led by an increase in marketing spends and losses of new businesses. In Q3, Aditya Birla Fashion and Retail reported over a three-fold jump in its net profit to ₹196.80 crore versus a net profit of ₹58.44 in the year-ago quarter. Its revenue from operations rose 43.87 percent to ₹2,987.10 crore during the quarter under review, against ₹2,076.19 crore in the corresponding period of the previous fiscal. The stock fell 8 percent in the last 1 year and around 18 percent in 2023 YTD.
Lupin: The pharma major's downgrade is led by a delay in gSpiriva approval and a miss on the cost-reduction target by the management, noted Ambit. Lupin reported a 72 percent decline in consolidated net profit at ₹153 crore for the third quarter ended December 31, 2022. It reported a net profit of ₹545 crore for the October-December period last fiscal. Its total revenue from operations however increased to ₹4,322 crore as compared with ₹4,161 crore in the year-ago period. The stock fell 12 percent in the last 1 year and 9 percent in 2023 YTD.
Voltas: The company's EPS downgrade is driven by exceptional losses in Q3FY23 due to provisioning in MEP business, said the brokerage. The Tata Group firm reported a consolidated net loss of ₹110.49 crore for the third quarter ended December 2022 on account of provisioning made on overseas projects. It posted a consolidated net profit of ₹96.56 crore in the same quarter last year. Its revenue from operations was up 11.82 percent to ₹2,005.61 crore during the quarter under review as against ₹1,793.59 crore in the year-ago period. The stock shed 28 percent in the last 1 year and jumped 13 percent in 2023 YTD.
