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

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.