Q4 Earnings Review - A Strong Close To FY21; Cyclicals Lead The Beat: Motilal Oswal

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Motilal Oswal Report

Corporate earnings in the last quarter of FY21 continued the momentum of the preceding two quarters and ended the year on a good note, aided by the deflated base in Q4 FY20 and healthy demand recovery for a large part of Q4 FY21.

However, Q1 FY22 has seen a familiar disruption, with the second Covid-19 wave engulfing India and several states imposing lockdowns in April 2021 and May 2021.

The trend of earnings revision has changed in favor of downgrades again in Q4 FY21 after two consecutive quarters (Q2 and Q3 FY21) of upgrades.

The downgrade-to-upgrade ratio stood at 1.6:1.

The second Covid-19 wave peaked in May-21 and active cases are currently 80% below its peak.

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