InvestorQ : What were the key drivers of the good performance put up by Indian companies in the second quarter of FY21?
Chandralekha Desai made post

What were the key drivers of the good performance put up by Indian companies in the second quarter of FY21?

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NISHA Nayak answered.
2 months ago
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Motilal Oswal has presented a detailed analysis of the quarterly results and has outlined some key features of the quarterly results. Here is a quick summation of the key takeaways from the quarter.

· Overall, there were healthy 9-10% earnings upgrades for FY21 estimates of Nifty stocks, which offer comfort on valuations in the coming year.

· The big story of the quarter was the focus on cost mitigation measures. From lower travel costs, to lower rentals and lower inputs costs, the benefits have been huge.

· It was not just about costs. There was also support in the form of recovery in demand as well as healthy tailwinds from gross margin expansion.

· The sample of Indian companies witnessed 9% EBITDA expansion despite 7% fall in revenues, which was largely on account of the lag effect of COVID.

· In terms of sectoral trends, almost all the sectors barring capital goods and utilities saw operating profit margin or OPM expansion.

· In fact, the trend is clear from the fact that operating costs fell by 11% on a YOY basis and the flexible component of other expenses fell by 8%.

· The fall in costs was extremely pronounced in the case of sectors like oil & gas, technology, automobiles and cement.

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