MARKET OUTLOOK & EARNINGS UPDATE –

Q1 FY22
 BSE200 Profit down Q-o-Q; significantly above pre-pandemic level

• BSE200 Profits in June 2021 were Rs 1,701 bn (1,71,000 cr); down from Rs 2,143 bn in Q4 FY21

• Despite the disruption on account of the second wave, profits were significantly above pre-pandemic levels (Rs 1,256 bn in
June 2019)

BSE200 PAT ( Rs bn)

2,500
2,143
2,000 1,925
1,701
1,620
1,500 1,322 1,316
1,247 1,256 1,259
1,175 1,133 1,078
1,000
793

500

-
Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21
Source: Bloomberg. Data is for Absolute PAT for BSE200 Index

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 Profit Growth led by Margin expansion; Corp Bank Profitability

Absolute Sales (Rs trn)

18.0 16.8
14.9 15.0 14.5 14.8 15.3
16.0 13.6 14.2 13.8 14.5 14.2
14.0 12.9
12.0 9.8 • June 2021 Sales (Rs 15.3 trn) higher than June
10.0 2019 levels (Rs 14.5 trn)
8.0
6.0
4.0 • Sales lower than Mar 2021 (Rs 16.8 trn)
2.0
-

Absolute EBITDA (%)

25.0%
19.1% 18.7% 18.7% 18.5%
20.0%
16.4% 15.3% 16.1% 15.9% 15.6% 15.7%
17.3% • June 2021 Margins at 18.5% in line with last 2
14.4% 13.6%
15.0% quarters.
10.0%
• Since June 2020, Margins significantly higher
5.0%
than pre-pandemic levels
0.0%

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Source: Bloomberg
 Sector Contribution to PAT Growth

• Swing in profits driven by Commodities (Metals), Corporate Banks and Oil & Gas

• Sectors like Industrial and Auto saw a negative swing on account of operating deleverage and high commodity prices

Source: Bloomberg. All Figures are in Rs bn

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 Q1 FY 22 Earnings Snapshot
Earnings robust despite 2nd wave

• Given the low base of Q1 FY21, Earnings comparison on a y-o-y basis does not make sense

• On a 2 Year CAGR basis vs Q1 FY20, Sales, EBITDA and PAT were up 3%, 11% and 16% respectively

Q1 FY22 vs Q1 FY21 Q1 FY22 vs Q1 FY20 2 Year CAGR

250% 18% 16%
15%
197% 15%
200%
12% 11%
150%
114% 9%
100%
68% 6%
57%
50% 3%
3%

0% 0%
Sales ex Fin EBITDA ex Fin PAT ex Fin PAT Sales ex Fin EBITDA ex Fin PAT ex Fin PAT

Source: Bloomberg; CAGR : Compound annual growth rate

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 Sector Wise EBITDA Growth
Telecom, Health Care & Commodities gain; Auto, Discretionary & Industrials impacted

• On a 2 Year CAGR basis vs Q1 FY20, EBITDA was higher for Commodities, Telecom and Health Care.

• While, Consumer Discretionary, Industrial and Auto were laggards

EBITDA 1Q FY20 to 1Q FY22 CAGR

50%
41%
40%
30% 24%
18% 17%
20%
11%
10% 6% 4% 3%
0%
-10% -1%
-11%
-20%
-30% -23%
-40% -32%

Source: Bloomberg

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 Q-o-Q Trend of Sector Wise Profit
• Q2 Profits were lower Q-o-Q but significantly higher than June 2020 and even June 2019 levels

• All sectors (except Corporate Banks) saw a Q-o-Q decline in profits on lower volumes and operating deleverage

• FY22 Est Profits are Rs 8,252 bn. With total Profit of Rs 1,701 bn in Q1, to meet the FY22 estimates, the next 9 month profit has to be
6500 bn (~2200 bn per quarter) which is higher than ever reported
SectorWise Absolute PAT Q Q Q Q Q Q Q Q FY FY FY FY
Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Mar-20 Mar-21 Mar-22 Mar-23
Banks - Retail 118 125 102 104 129 136 124 110 450 492 582 739
Banks - Corporate -31 67 -9 108 174 187 194 207 18 642 929 1,218
NBFC - Stable 95 95 84 94 106 126 117 73 483 503 570 749
NBFC - Cyclical 59 81 2 69 89 83 71 65 186 295 299 362
Auto 69 82 -17 -99 66 123 147 -13 178 174 374 563
Consumer Discretionary 38 38 15 -5 25 46 40 13 126 103 156 214
Consumer Staples 93 89 81 72 91 91 93 88 339 323 400 462
Information Technology 200 209 203 192 219 241 214 242 795 887 1,012 1,146
Health Care 71 43 60 71 85 73 80 92 234 310 360 432
Cement / Building Mat 34 36 67 34 60 71 87 70 167 188 228 268
Industrials 53 67 29 -32 57 62 75 4 202 102 258 411
Commodities 182 113 210 7 142 265 414 378 627 766 1,420 1,228
Energy 205 232 219 171 291 300 411 317 954 1,185 1,277 1,498
Utilities 123 85 61 91 141 113 114 108 349 433 464 527
Telecommunication Services -50 -46 -31 -83 -56 9 -38 -54 -363 -292 -77 27
BSE200 1,259 1,316 1,078 793 1,620 1,925 2,143 1,701 4,746 6,110 8,252 9,844

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Source: Bloomberg. All Figures are in Rs bn
 Upgrades to FY23 Estimates continue despite 2nd wave

• Despite the disruption on account of the 2nd wave, FY23 EPS upgrades continued for the 4th successive quarter

• First time since the 2008 GFC (Global Financial crisis), BSE 200 has seen 4 consecutive quarters of upgrades

BSE200 EPS Revision 2 Year Forward

6.0% 4.6% 4.5%

4.0%
2.1%
2.0%
0.3%
0.0%
0.0%
-2.0% -0.7% -1.0%
-1.6% -1.4% -1.5% -1.9%
-2.1%
-4.0% -2.7% -2.7% -2.8% -3.1%
-3.8%
-6.0% -4.9% -4.7% -4.4%

-8.0%
-8.1%
-10.0%
-12.0% -11.3%
-14.0% -12.6%

Source: Bloomberg
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 FY23: Favorable Upgrade - Downgrade Ratio and EPS Change
• EPS Upgrades has been broad-based across sectors and market cap buckets

• Upgrade : Downgrade ratio for BSE200 is healthy at 112:81

• Cyclicals – Cement, Energy, Commodities, Utilities saw the most favorable Upgrade: Downgrade Ratio

• Stable sectors – Retail Banks, Auto saw far more downgrades than upgrades

BSE 200 Upgrade - Downgrade Ratio: Current Quarter

0 0
3 3 3 1 6 9 6 81 9
6 10 6 13 6
10 7
13 10 9 3 12 14 9 112 9
4 5 2 4 1
D ISC
CM DT Y

IT

CORP BK
P HARM A

STAP

BS E 2 0 0

AUTO

RE T BK
T E LECOM
CE M E N T

E N E RGY

N BFCCYC
N BFCSTA B
UT ILIT IES

IN D UST RIAL
Upgrades Downgrades

Source: Bloomberg 9
 FY23: Favorable Upgrade - Downgrade Ratio and EPS Change

Average EPS Change: current quarter

8.0 7.4
5.9
6.0
4.4 4.3
4.0 2.7
1.8
2.0 1.3 1.1
0.6 0.5
-
-0.5 -0.6 -0.9
-2.0 -1.2
-4.0 -3.2
-3.8
-6.0
Telecom
Energy

Cmdty

Stap

Auto

NBFCCyc
Cement

Pharma

RetBk
Disc
Utilities

IT

NBFCStab
BSE200

CorpBk

Industrial
Source: Bloomberg

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 Sector Contribution to Absolute PAT Growth

• Corporate Banks, Commodities Auto and Telecom key drivers of Earnings from FY 21-23

Source: Bloomberg

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 Sector Wise PAT Growth
Again Cyclicals and Discretionary sectors to have highest PAT growth

Sector Wise PAT Growth - FY23 over FY21

120%
101%
100%
80%
80%

60%
44%
38%
40%
27% 27% 23% 22% 20% 19% 18%
20% 14% 12% 11% 10%
0%
0%

Oil & Gas

Cmdty

Stap
Auto

Telecom
Cement

NBFCCyc
RetBk
Disc

Pharma
CorpBk

Utilities
BSE200

NBFCStab

IT
Industrial

Source: Bloomberg

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 Summary

• Apr-June quarterly numbers were not as strong as Q4FY21 but were decidedly better than Q1 FY21 on a y-o-y
basis.

• Across sectors, gross margins were impacted by higher Raw Material costs, strong focus on cost-cutting boosted
EBIDTA growth.

• Q2 profits were lower Q-o-Q but significantly higher than June 2020 and even June 2019 levels

• Despite the disruption on account of the 2nd wave, FY 23 EPS upgrades continued for the 4th successive quarter

• First time since the 2008 GFC (Global Financial crisis), BSE 200 has seen 4 consecutive quarters of upgrades

• Cyclicals – Cement, Energy, Commodities, Utilities saw the most favorable Upgrade: Downgrade Ratio

• Stable sectors – Retail Banks, Auto saw far more downgrades than upgrades

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