Overall growth
For Q1FY23, on a 3-year CAGR basis, aggregate Sales/Ebitda/PAT growth was 16%/10%/17% (PAT includes financials). Sectors with decent PAT growth include Healthcare (56%), PSU Banks (45%) and Metals (41%) and Private Banks (27%). Analysts at IIFL Securities continue to like private banks, as the large private banks yet again reported robust loan growth (top 5 banks each reporting a loan growth of about 5% QoQ). PCR also maintained at 70-80% despite low provisions. GNPAs also seem to be trending down.
Margin pressures
Aggregate (Ex-financials), EBITDA margins fell from 16% in Q4FY22 to 13% in Q1FY23 i.e. by about 230 bps. The YoY compression is even steeper, with aggregate margins falling by 463 bps versus Q1FY22. Most sectors saw a QoQ and YoY margin compression, led by Commodities, Telecom, Utilities and Media.
Earnings downgrades
Majority of the sectors have seen earnings cut during the current result season, with an aggregate PAT cut of 5% (6.5% since March 2022). Sectors with major downgrades include OMCs, Upstream O&G, Building Materials and Telecom. Companies with estimated FY23 EBITDA margins still significantly above the FY16-22 (excl. FY21) average, are IRCTC, Indian Hotels, Natco Pharma and Jubilant.
On the other hand, companies that analysts at IIFL Securities would like to highlight with estimated FY23 margins well below recent average include NMDC, Alembic Pharma, GSPL, and Tata Power.
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