Q2 Results : How to make sense of it?

So, the results season is on. 

So far, it has been the two behemoths, Infosys and HDFC Bank, which have declared their results. As has been the trend with Infy for the past few quarters, it's shares rose before the results day and fell sharply after the results were declared. Infy saw another dismal quarter and now the PE valuation between TCS and Infy has increased to unprecedented levels. As per Friday's closing, Infy is trading at a PE of 15.3 while TCS trades at a PE of 21.7! Till a year ago, Infy used to get a higher premium than TCS. The management guidance is not very encouraging for the investors and the continuous shifting of the top management from one position to another is also not sitting good with them. However, if Infy moves closer to Rs 2000/share under the present condition, it will become a dream-price kind of opportunity for a long term investor.

HDFC Bank carried on its superior performance and reported a PAT at 30% due to robust loan growth in the quarter gone by. However, the rich valuations that the bank is already having, there is not much upside present in the stock at this period of time.

The next week has several big names declaring their results. While Sales and PAT are the most common numbers that are tracked for every company, business-specific numbers sometime decide the stock price movement on the results day.

For eg, SBI could fall 5% even if its profit rises above everyone's estimates. Why? Because since the number of companies like Kingfisher Airlines, Suzlon, DCHL etc have increased in the loan portfolio of the banks, the focus has shifted from their NIMs (Net Interest Margins) to their reported NPA (Non-Performing Assets) numbers.

Thus, I will try to cover such numbers apart from the usual Sales and PAT figures to bring a much better visibility about the financial health of the companies.

15th Oct : Reliance Industries
The major numbers associated with RIL are its Sales, PAT, GRM and KG-D6 production. Based on various analyst reports, the verdict of the market can be narrowed down to the below table.

Street will be surprised if:

Parameters	+ve Surprise	-ve Surprise
Sales	Above Rs 94500 Cr	Below Rs 93000 Cr
PAT	Above Rs 5600 Cr	Below Rs 5100 Cr
GRMs	Above USD 9.5/bbl	Below USD 9/bbl
KG-D6 Production	Above 29.5 mmscmd	Below 27.5 mmscmd

Gross Refining Margin (GRM)-The difference between the cost of processing crude and the revenue from selling finished petroleum products.

15th Oct : Axis Bank
Investors are bullish on Axis Bank. The key numbers to watch out for in Axis Bank's results are its Net Sales, Net Interest Income, Net Interest Margins, Loan Book Growth, Non-Performing Assets and Loan Restructuring Pipeline, Provisions, CASA ratio and management's commentary on its asset quality.

Parameters	+ve Surprise	-ve Surprise
Sales	Above Rs 2400 Cr	Below Rs 2100 Cr
NIIs	Above Rs 1160 Cr	Below Rs 1075 Cr
NIMs	Above 3.5%	Below 3%
Loan Book Growth	Above 32%	Below 27%
NPAs (Gross)	Below 0.6%	Above 1%

16th Oct : Mindtree
As with most of the IT companies, the major numbers to look out for Mindtree are sales, profits, attrition rate, forex losses if any, client additions and management guidance (if provided).
Mindtree can surprise the street if it somehow reports a better PAT, northwards of Rs 75 Cr.
Similrly, HCL Tech coming up with its results on 17th Oct needs to report a PAT exceeding Rs 800 Cr for an upmove from the current price of Rs 581.65 a share. Although, in all likelihood, the price can climb a little higher on Monday/Tuesday in anticipation of the results.

17th Oct : Rallis India
With the improvement of monsoon in the later part of the year and increase in the sowing area of Kharif crops so much so that the deficit remained less than 4% of last year, Rallis India is expected to put up good show. It is expected to see an increase of around 46% QOQ in sales and a whopping 152% QOQ in Profits.

Parameters	+ve Surprise	-ve Surprise
Sales	Above Rs 510 Cr	Below Rs 490 Cr
Profits	Above Rs 64 Cr	Below 57 Cr



Note: Dhanuka Agritech is in the same space and can be looked into for far superior returns than Rallis India in the upcoming results.

With ACC & Ambuja reporting their numbers on 18th, it is going to be a day for Cement Sector. I shall try to cover those and other upcoming results in the forthcoming articles to make sure that investors can make sense of the various numbers declared by the companies and the caveats if any.
The tables above have been created with an intent to help the traders to take a long or a short call on the results day. However, it should not be taken as the only criteria for taking a position. The numbers have been derived from the average of various analyst expectations and by going through previous quarters' results to understand traders' sentiments towards the company's results.
Like all other articles, I hope it helps you to make money in the market :)