Bharti Airtel, Adani Green Energy and Maharashtra Scooters are among the top 10 companies in India Inc which reported highest EBITDA margins of at least 50% in FY23.
To find out top performing companies within the BSE500 pack on the basis of highest EBITDA margin in FY23, we considered only those with at least 10% growth in both sales and profit figures during the financial year. Financial stocks were excluded from this analysis.
Maharashtra Scooters, whose share price has grown by around 45% in the last one year, came on top of this list with 89.5% EBITDA margin. It recorded 11.5% growth in sales and 36.84% profit growth in FY23.
Similarly, SJVN's EBITDA margin also improved to 75.9% in FY23 from 71.4% in FY22. Others in the list of companies with highest EBITDA margin include Nesco, Adani Green Energy, The Phoenix Mills, Gujarat Pipavav Port, The Great Eastern Shipping Company, Bharti Airtel, IRB Infrastructure Developers and Oberoi Realty.
A softening in input costs coupled with price hikes undertaken by firms led to a sequential recovery in companies' margins during the past few quarters. However, analysts fear that earnings uncertainty may persist over the near term owing to geopolitical developments and the impact of the inflationary environment on demand.
"While higher inflation will cause profitability to weaken, especially for sectors that are not able to pass on the increased cost to customers, India's relatively strong economic growth will limit the earnings decline for rated corporates," Moody's Associate Managing Director Vikash Halan said.
What should investors do?
Elara Capital noted that for stocks within its coverage universe EBITDA margin expansion (ex-financials) of 129 bps QoQ was strong and led by consumer discretionary, primarily autos, with a 164 bps YoY improvement and energy with a 110 bps YoY improvement (better OMC GRM due to discounted crude from Russia).
"We expect auto and cement to continue to benefit from falling cost of input commodities, setting the stage for sustained earnings growth. Our outlook for NBFC remains positive, driven by robust loan growth and benign credit cost," Elara said.
Jefferies analysts have raised FY24 earnings estimates for 45% of 136 companies. Lending financials, autos & metals mostly saw upgrades while IT and cement saw downgrades.
An analysis by IIFL shows that in Q4 EBITDA grew by 3% for BSE500 companies. Overall, the BSE500 saw a 2.5% EPS cut during the results season, with most sectors seeing downgrades.
"We introduce Balkrishna Industries in our top mid-cap picks, and remove DLF and Apollo Tyres after their recent sharp O/P. Bharti, BoB, Indigo, SBI Life and NTPC are among our top large-cap picks," IIFL Securities said.
(Data inputs: Ritesh Presswala)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
