Q3 mid-season review: Top-line growth is stabilised, positive on consumption theme, says Emkay Global

The October-December earnings season of the current financial year was expected to remain slightly off considering the economic crisis, demand slowdown and global market meltdown last year. Despite factoring all the negatives, most companies reported a stabilised top-line growth in Q3FY20, showing continued weakness but arresting the declining trajectory of previous quarters.

In Q2FY20, nearly two-thirds of the companies reported a deceleration in sales growth; now nearly half of the stocks reported an acceleration in top-line growth trends. The improvement in top-line trajectory was very evident across agri-chemicals, auto, power and retail. On the other hand, pharma, media and specialty chemicals saw most companies report a weakening in top-line trajectory, said Emkay Global Financial Services in its report.

At an absolute top-line level, the brokerage said that agri-chemical and insurance sectors remained the fastest-growing while auto and media reported the weakest growth. Furthermore, in this quarter, the aggregate operating profit growth remained stable at 10 percent YoY. At an absolute level, agri-chemicals again saw the strongest operating profit growth.