How to analyse quarterly results statement – PRAVEEN PATHIYIL
Acording to the SEBI guidelines, it is compulsory for the listed entities to declare their quarterly financial results. There is a prescribed format in which financial performance of the company is to be updated to the exchanges. Over the years, SEBI has made many improvisations in making it simple and inclusive. While it is a compulsion for the companies to announce results in a prescribed format and time frame, it comes as an opportunity for investors as quarterly results surely make an impact on the share prices on bourses. As the results dates are announced in advance, there is always an opportunity for market participants.
Equity markets run on expectations, and hence there is always a built up of expectations ahead of results. On the results day, there comes a reaction based on actual numbers announced by the company. While it is difficult to provide estimates, it is surely easier to analyse the results statement. And, as fast as we analyse or decode the results statement, it provides us better opportunities to take a rational decision. Going ahead in this article, we are providing a few pointers that would help the readers understand the quarterly results statement in a simple and better manner.
Quarterly Results Statement
As mentioned earlier, there is a prescribed format for presenting quarterly results; and the companies announce the results for four quarters viz.- March, June, September and December. Usually, the March quarter is the last quarter of the fiscal as in India our Fiscal year starts from the first day of April and ends on the last day of March. The last quarter results of the fiscal year are most important ones as not only it provides whole year results analysis, but also the company management announces guidance commentary for the next fiscal. There are few companies where other quarters are yearly close. However, most of the companies are now realigning with March quarter yearly ending. Following is a format for Quarterly results of Voltas Ltd.
|Description||Amount (Rs. million)|
|Net Sales / Income from Operations||18,448.10|
|Other Operating Income||103.7|
|Employee Benefit Expenses||-1,627.60|
|Changes in inventories of finished goods, WIP and Stock-in-trade||166.7|
|Depreciation and Amortisation expense||-65.5|
|Purchases of Stock in Trade||-3,233.00|
|Cost of Materials Consumed||-10,104.20|
|Profit (+)/ Loss (-) from Ordinary Activities before Tax||2,248.10|
|Net Profit (+)/ Loss (-) from Ordinary Activities after Tax||1,597.60|
|Prior Period Items||0|
|Share of Profit & Loss of Associates||-0.9|
|Net Profit after Mino Inter & Share of P & L||1,576.20|
|Income Attributable to Consolidated Group||1,576.20|
|Cost of Investment In Sub||0|
|Face Value (in Rs)||1|
|EPS before Extraordinary items (in Rs)|
|Profit from Operations before Other Income, Interest and Exceptional Items||1,929.90|
|Profit before Interest and Exceptional Items||2,287.10|
|Profit after Interest but before Exceptional Items||2,238.70|
|Net Profit Loss for the period from continuing operations||1,597.60|
While analysing the quarterly results statements, there are few basic factors. Like, if a company announces both standalone and consolidated results, we have to analyse consolidated results and not the stand alone ones. Just to put an example, in the case of theinfrastructure companies, real estate companies or the ones having subsidiaries abroad, there is a great amount of difference in standalone and consolidated figures.
The second factor is thatwe have to compare quarterly results with previous results and that comparative analysis provides us a lot of insights. However, one needs to understand which quarter to consider for comparison. Like, in few sectors, we need to consider sequential performance.And, in some cases, it is better to consider yearly analysis. To make it simple for our investors, all cyclical sectors like Cement, Steel, Sugar and other few manufacturers are to be analysed on year on year (Y-o-Y) basis. Other sectors, including services segment like IT, Banking, Telecom, and Retail, are to be analysed on sequential (Q-o-Q basis).