Punishing earnings: How RIL, Infosys, Zomato dragged benchmarks lower

New Delhi: It was an earnings-heavy weekend, with 33% of the weightage of Nifty50 companies declaring their quarter one results. From Mukesh Ambani-led Reliance industries to IT bellwether Infosys to banking majors ICICI and Kotak Mahindra bank all announcing their numbers for the quarter gone by. While Reliance gave an in-line set of numbers it did miss estimates by a big margin in its O2C segment. The street was quick to react punishing the stock, which fell over 3% in trade. Which in turn dragged the Nifty lower, which closed below the 16,700 level. This was also the biggest single-day fall for Reliance since July 1, 2022

So, what were the reasons behind the fall? One of the factors could be that the refining to retail conglomerate saw its Net Debt rise to `56,655 Cr. Also, despite the tailwinds from Singapore GRMs, the O2C segment was disappointed. The street was also anticipating some disclosures on the JioMart and JioPhone front, however, there wasn't much divulged there either. As far as brokerages are concerned, they continue to keep an overweight or Buy stance on RIL, with Macquarie even raising its EPS by 1-2% To ~`100/Share for FY23-24.

Infosys too was in focus, as it declared its earnings on Sunday. While it raised its revenue guidance, the wage hikes taken during the quarter are what impacted its margins. Salil Parekh, CEO at Infosys said that the increased cost environment is what would impact margins. "We've seen strong growth in Q1 and our current outlook on demand opportunity and pipeline is robust. We increase our revenue growth guidance which was at 13-15% to 14-16% this year. Keeping our margin guidance at 21%. With the increased cost environment, we will be at the lower end of the margin guidance."

But it was the new-age company Zomato, which took it on the chin, tumbling as much as 14% in trade to end below the psychological 50-rupee mark. The stock tanked on the back of the expiry for the lock-in period for Pre-IPO Investors, which ended on July 23rd. This meant that PE investors and even employees who had stock options chose to exit the company. Shares of the online food delivery and restaurant discovery platform crashed to lifetime lows.

Karan Taurani, Sr VP, Elara Securities who tracks the sector closely while speaking to ET NOW said that he doesn't see the stock falling much more from its current levels unless something "drastic" happens.

"Unless something goes wrong, there because of delivery cost inching up or because of wage inflation or with fuel cost increasing this could drive their unit economics lower. But they are working hard to increase their take rates as that could drive their unit economics as other levers are largely capped out, with a growth rate at 3-4%" he added.