The reported earnings of most Sensex companies were higher than the estimates in FY12.
Higher revenues from new product launches and improved asset quality helped some companies surprise the analyst fraternity. But there were also others that fell by the wayside in the race to meet analysts' expectations, checked by mounting fuel costs and higher interest outgo.
A comparison of Bloomberg's consensus estimates (mean of analyst estimates) and actual earnings reported by the 30 companies constituting the Sensex basket reveals that 18 companies bettered consensus expectations. These companies account for 82 per cent weight in the Sensex and include behemoths such as ITC, Reliance Industries, Infosys and HDFC.
The key laggards were Tata Power, Hindalco and DLF. The earnings reported by these companies were 15-60 per cent lower than expectations.
Driven by JLR
While most companies have been hit hard by the growth deceleration in Europe, Tata Motors' European acquisition, JLR, has actually helped the company's outperformance. It surpassed analyst estimates by almost 30 per cent.
At the outset of the last fiscal year, most analysts were jittery about JLR's prospects against the backdrop of the economic crisis in Europe but JLR bucked the trend by posting strong numbers. Range rover Evoque, launched in the second quarter of last fiscal, proved to be a thumping success for the company. This, along with strong sales of the refurbished diesel variant of the Jaguar, helped Tata Motors emerge a winner last fiscal.
HDFC was the other company that exceeded expectations by almost 22 per cent. The company could achieve this with improved asset quality and strong growth in loan book, coupled with improved profitability of the investment arms.
Accounting changes
Tata Power was among those companies that reported earnings far below expectations. The Tata Power management's decision to write down its investment in the Mundra ultra mega power project roiled its earnings last fiscal.
Spiralling coal prices in the Indonesian market and low power tariffs caught the company on the wrong foot.
The amortisation hit taken in the second and last quarters of the fiscal led to a 60 per cent underperformance in the reported earnings vis-à-vis expectations.
The company reported a loss of Rs 1,088 crore last fiscal. Hindalco's 20 per cent earnings miss was also largely because of the steep increase in coal prices.