Q4 sectoral review: Financials, autos put up a strong show, while IT, cement players disappoint

However, revenue growth remained at mid-teen levels during the quarter. Revenues and EBITDA for the March quarter grew 16% and 18%, respectively, on a YoY basis, with the EBITDA margins growing 0.3 ppt YoY.

The brokerage said it is bullish on cyclical, going forward. “With over 40% growth in property sales and cap-good order flow, the private capex cycle is slowly catching up, and we are bullish on cyclical,” it said.

Post the fourth quarter results, Jefferies analysts raised FY24 earnings estimates for 45% of 136 companies. 51% of companies were downgraded. The consensus was cut to FY24 earnings by 1.9% for the Nifty during the results season.

Lending financials, autos, and metals, mostly saw upgrades, while IT and cement saw downgrades.

Sectorally, banks reported 46% earnings growth with upgrades of 3-7% for Axis Bank, ICICI Bank, SBI, Kotak Bank, and IndusInd Bank. Further, select NBFCs also saw upgrades.

Most of these upgrades were driven by net interest margins (NIMs) and continued good credit quality.Meanwhile, auto OEM results were also strong, with several companies reporting record EBITDA per vehicle, led by healthy mix and margins.

During the quarter, the commentary was positive for passenger vehicles (PVs) and stable to positive for two-wheeler companies.

Pharma firms saw mostly in-line with the above results, with US generics pricing seeing improvements. Declining commodity costs driving improved margin commentaries.

The major miss during the March quarter came from the IT sector, with some of the heavyweights seeing significant revenue misses and weak single-digit growth guidance for FY24 revenues. Net employee count declined QoQ for the IT majors.

Consumer discretionary companies, on the other hand, saw a mixed trend in Q4 with high-frequency (QSR) weak and seeing the impact of inflation in consumption.

For cement companies, a sequential improvement was seen in EBITDA per tonne of 35% with 9% YoY volume growth. However, earnings were cut for most companies in this space as pricing declined 1% QoQ in a seasonally strong quarter.

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