Who doesn’t enjoy surprises? The word makes us think of something pleasing and unexpected. However, when viewed through the lens of an analyst with specific forecasts about a company’s performance, surprises can be negative too, as we’ll explore in this article.
If you check the quarterly reports of analysts, available here, it typically begins with an assessment of whether the firm exceeded or missed estimates for revenue, net profit, margins, and other key metrics in their results. These beats and misses significantly impact the company’s share price. In this week’s chart of the week, we’ll look at Trendlyne’s Analyst Estimates dashboard to review companies that either beat or missed forecasted estimates for Q2 FY25.
Banks shine in Q2, wealth management & related firms outperform
Most banks reported strong results in Q2, with firms like ICICI Bank and Axis Bank exceeding analyst expectations for revenue and net profit. Improved asset quality and sustained loan growth boosted earnings; deposits however, remain a concern, impacting profitability. Changing savings preferences have driven customers away from deposit accounts, as more and more people buy into the idea of “Mutual Funds sahi hai.”
Public Sector Undertaking (PSU) banks like the Bank of Baroda, Punjab National Bank, and Union Bank of India outperformed estimates by significant margins. Many PSU banks currently offer strong valuations, with Trendlyne Valuation Scores above 70. This trend aligns with Nifty PSU Bank—an index of 12 government banks—trading at a discount of over 15% from its 52-week high.
On the contrary, Kotak Mahindra Bank missed its consensus estimates due to higher slippages (bad debt), particularly in the credit card and microfinance segments, impacted by macroeconomic stress and borrower overleveraging. In response to this, traders and investors led Kotak’s share price down by over 4% on the result announcement day, October 21. The RBI's ban on digital customer onboarding by Kotak due to a tech embargo has also slowed growth, especially in new credit cards. A positive development for the bank, however, was the significant growth in deposits, driven by the relaunch of ActivMoney, an alternative to fixed deposits.
All asset management companies, including HDFC AMC, Nippon Life India, UTI AMC, and Aditya Birla Sun Life AMC, surpassed estimates by wide margins, reflecting increased investor confidence in India’s long-term economic growth. Other firms, like CDSL, MCX, and KFIN Technologies, also reported strong results, benefiting from similar trends.
Consumer electronics, realty and general industrials were a mixed-bag
The past few years have been favourable for consumer electronics manufacturers in India. Demand continues to rise, driven by rapid advancements in technology, such as the shift from 3G to 4G to 5G and the emergence of generative AI. On the supply side, the government has introduced policies to incentivize local manufacturing of electronic goods, supporting industry growth.
Rising disposable incomes have also blurred the line between essential and discretionary products. What was once considered a luxury is now viewed as a norm. Companies like Dixon Technologies and Amber Enterprises exceeded revenue and net profit estimates by significant margins. In contrast, Voltas missed estimates slightly during a seasonally weak quarter, as much of its revenue relies on air-conditioner sales.
The real estate sector experienced a mixed performance, with both upbeat and downbeat results. DLF, Godrej Properties, and Prestige Estates Projects reported positive Q2 results, while Macrotech Developers, Oberoi Realty, and Phoenix Mills posted weaker-than-expected results. Similarly, in the general industrials sector, companies like BHEL and Jindal Saw exceeded expectations, whereas Grindwell Norton, Suzlon Energy, Supreme Industries, and AIA Engineering underperformed relative to Forecaster estimates.
OMCs miss estimates on all fronts
Q2 was a real bummer for oil marketing companies (OMCs) such as Indian Oil, Bharat Petroleum, and Hindustan Petroleum. All of these firms missed net profit estimates and saw it decline for another quarter — a negative trend that started in Q2 last year. However, just before this downhill journey, these OMCs had reported all-time high net profits because of cheap Russian crude that India imported last year. Even today, India imports most of its crude oil from Russia (above 40%), but it is not as cheap, creating pressure on their profit margins.
Meanwhile, in the pharma industry, it feels like the firms were struggling to manage both sides of the scale — one side representing revenue and the other side representing net profit. Pharma bellwethers like Sun Pharmaceutical and Cipla barely managed to meet their revenue consensus, while delivering on higher than expected net income. On the contrary, firms like Torrent Pharmaceuticals, Ajanta Pharma, and Piramal Pharma missed Forecaster's net profit estimates, primarily due to their growth-seeking approach.
