Q2 roundup: India’s Kos gets festive boost; Nearly 62% after earnings rise

BENGALURU (Reuters) – Nearly two-thirds of nearly 200 Indian companies with a market capitalization of $100 million and more reported an increase in profits for the September quarter, data tracked by Reuters showed.

Refinitiv data showed that of the 191 companies tracked, 118 reported a rise in earnings, with nearly 90% of those reporting a rise in quarterly revenue.

Outfitters, restaurants, banks and construction companies saw sales and orders soar as the country braced for a festive, pandemic-free season two years ago.

Consumers bought food and other supplies even through burning price inflation.

“There is definitely an undeniable festive boost which is reflected in the earnings performance,” said Vivek Kumar, an economist at Mumbai-based Quantico Research.

“There was also some relief from moderating input prices in the quarter, and an increase in pent-up demand. All of these factors came together to help.”

Retail sales in India peak during Diwali, the festival of lights, when Indians usually splurge on clothes, accessories, consumer goods and cars. Diwali falls this year on October 24.

“It’s the first Diwali after COVID where people are able to go out and mingle with their friends and family and that definitely helps,” Shoppers Stop Ltd (SHOP.NS) After the supermarket chain reported profits in the last September quarter, CEO Venu Nair told Reuters, more than last year’s loss. Read more

Nair said he expects sales in the festive quarter to reach their highest levels before the pandemic.

Maruti Suzuki, India’s largest automaker, reported a four-fold jump in quarterly profit, while leading builder Larsen & Toubro Ltd. (LART.NS) A surge in inflows has seen investments in infrastructure return, with several buildings, factories, metro and other project work underway as Covid-related restrictions ease.

L&T earnings are often viewed by analysts as a proxy for capital spending in the economy, as it takes on public and private infrastructure projects.

Government data showed that India’s capital spending rose nearly 50% from last year to 3.43 trillion rupees in the April-September period.

Meanwhile, Anarock Property Consultants expects home sales this year to break the previous peak of 2014 led by strong momentum in festive demand and strong performance in the first three quarters.

Refinitiv data showed restaurant revenue rose more than 90% from last year, followed by apparel and accessories, energy, construction, chemicals, banking and automobiles.

State Bank of India (SBI) (SBI.NS)the nation’s largest bank, posted record quarterly earnings and forecast double-digit credit growth.

“In an uncertain and fragile global economic environment, the Indian economy has demonstrated resilience,” SBI Chairman Dinesh Kumar Khara said on an earnings conference call.

He added that aggregate demand indicators show that the start of the holiday season and pent-up demand kept the growth driver very strong.

Even those companies, including Adani Wilmar (ADAW.NS)owner of the Fortune brand of cooking oil, which has been in lukewarm demand in rural India Sales are booming Against the background of lower prices for a few necessities and a late recovery in the monsoons.

India’s retail inflation accelerated in September to a five-month high of 7.41% as food prices rose, but analysts said most of the impact was covered in estimates by markets, as well as customers.

“Inflation is currently in amber territory and is expected to move to the green in the next two quarters,” said QuantEco’s Kumar.

A Reuters poll of economists forecast India’s inflation would likely slow to 6.73 percent in October, on lower food prices and a strong base a year ago.

“With monetary policy already responsive, the impact on domestic demand conditions is likely to be moderate,” Kumar added.

“An expected sharp slowdown in external demand will dampen earnings in the coming quarters.”

(Nivdita Bhattacharjee reports in Bengaluru); Additional reporting by Praveen Paramasivam and Aftab Ahmed in New Delhi; Editing by Dania Ann Thoppil

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