From Nestle India to Maruti Suzuki, impact of Covid-19 on earning estimates

Given the huge hit from lockdown, it is not surprising that 44 of the 80 companies have seen sharp cuts ranging 10% to 72%

The coronavirus pandemic has spared none, not even the best. But, a look at the manufacturing and services sector companies that are a part of S&P BSE 200 index, and which have declared their March quarter results so far, shows that a handful have in fact seen their earnings estimate for 2020-21 getting upgraded by analysts, or have seen a marginal cut. Here's a look at some of the companies that are less impacted, and those that have seen significant cut in earnings estimates since April, and why.

Given the huge hit from lockdown, it is not surprising that 44 of the 80 companies have seen sharp cuts ranging 10 per cent to 72 per cent. Only six companies have seen an upgrade, while the rest a single digit cut in their earnings estimates for 2020-21.

The lack of clarity on the pandemic's impact and the difficulty that India Inc is currently facing to restart business is only making things worse, even as the government and central bank have rolled out steps to limit the impact.

In an earnings review of 100 companies, Motilal Oswal Securities' analysts note: “FY21 earnings revision is significantly tilted in favour of downgrades, and so far, management commentaries suggest more volatility and disruption in earnings ahead with several Nifty companies seeing fresh double-digit earnings cuts.” Most company managements have stressed on the unique and unprecedented nature of the crisis, resulting in difficulty in providing guidance/predictions, they add.

COMPANIES HIT BY COVID

Current price is as on May 22, 2020; EPS is earnings per share; E is estimate; PE is price to earnings ratio based on CY20/FY21 estimate; # represents change in EPS estimates between April 1 and May 22 ; Data compiled by BS Research Bureau