The disappointing December-quarter earnings season is well reflected in how the stocks of leading bluechip companies have reacted to the third quarter numbers on the day of the result announcement.
Shares of more than half the 35 companies in BSE 100 that have announced quarterly numbers observed a sharp selling pressure on the day the results were announced. However, many stocks recovered in the subsequent trading sessions due to a general momentum in the broader market.
The list is predominantly led by financial services and consumer goods companies due to disappointment over higher provisions and lower-than-expected volume growth. On Friday, the shares of Bank of Baroda tanked as much as 13.6% after the bank reported a 69% y-o-y drop in the net profit due to higher provisions for bad loans and surge in tax expenses.
On similar lines, Union Bank shares fell 5% on January 27, after reporting a 13% drop in its December-quarter earnings on the account of higher provisioning and deterioration in asset quality.
M&M Financial Services, HDFC, LIC Housing Finance, Federal Bank and IDFC were the other financial services companies that saw shares dip anywhere between 7% and 1% on the day they reported their Q3 numbers.
Stocks of FMCG giants, Hindustan Unilever and ITC, too, corrected 5% on the day of their numbers were reported.
While HUL’s 3% y-o-y volume growth for the three months disappointed the Street, in case of ITC, both the topline and bottomline failed to meet Street estimates as the cigarette producer faced pressure in the business segment due to a sharp increase in the value added tax in Tamil Nadu, Kerala and Assam.
The 11% y-o-y growth in net earnings of Asian Paints in the December quarter was also considered below expectations as the paint company reported a single-digit volume growth due to sluggish domestic demand.
