1Q21 market earnings surge 207% YoY

First Capital Research, issuing a report, highlighted that March-quarter earnings surged by 207% Year-on-Year (YoY) to Rs. 110.8 billion led by diversified financials (988% YoY); capital goods (214% YoY); food, beverage, and tobacco (669% YoY), banks (70% YoY), and materials (267% YoY) for about 253 companies.

However, sluggish quarterly performance was witnessed on consumer services (-643% YoY) and real estate (-19% YoY), consumer durables and apparel (-170% YoY), and insurance (-4% YoY). Multiple sectors performed energetically; diversified financials; food, beverage, and tobacco; capital goods; banks; and materials sectors witnessed exceptional results.

Diversified financials recorded a growth of 988% YoY, primarily driven by the growth in LOLC (7,781% YoY) boosted by net other income and PLC (2,936%), owing to the reduction in impairment. Food, beverage, and tobacco sector earnings grew 669% YoY to Rs. 16.7 billion led by MELS, NEST BUKI, and CARS. MELS earnings spiked by 255% YoY due to the increase in other income and lower taxation rate. The capital goods sector witnessed a growth of 214% YoY benefited from remarkable performance in HAYL (1,417%) due to the strong performance in hand protection and consumer and retail segments while also benefiting from currency depreciation.

Further, the sector was benefited by TILE (962% YoY), LWL (1,753 %), and RCL (330% YoY) supported by the import restrictions. Banks witnessed a 70% YoY growth in earnings to record at Rs. 24.8 billion, primarily driven by COMB (79% YoY), SAMP (91%), and HNB (55%). Profits were boosted due to financial investment gains (forex and market to market gains) coupled with reduction in impairment provisioning. The material sector witnessed a 267% YoY, largely benefited by DIPD (1,448% YoY), LLUB (198% YoY), and TKYO (92% YoY).

Consumer services and real estate illustrated dull performance: However, the tourism industry continued to be adversely influenced, hence, consumer services sector earnings recorded a dip of 643% YoY. Real estate sector earnings (-19% YoY) have slowed down due to the ongoing pandemic, out of which RIL and SHAW witnessed a decline in earnings by 65% YoY and 89% YoY, respectively.