How will the Covid-19 pandemic impact Nifty companies' earnings in Q4FY20?

Margins in some sectors could improve due to soft raw material prices.

In Q4FY19 Nifty sales/EBITDA/PAT grew nearly 10 per cent/6 per cent/16 per cent year-on-year (YoY), respectively. Hence, the base as far as earnings before interest, taxes, depreciation, and amortisation (EBITDA) and profit after tax (PAT) is concerned, is high in Q4FY20. However in Q4FY19, profitability was driven largely by banks. Excluding banks, the PAT growth was slow at <2 per cent. The topline growth for Nifty companies in Q4FY19 was the slowest since Q3FY17.

COVID 19 would impact the performance of Nifty companies and overall corporate sector in Q4FY20 and Q1FY21. In Q4FY20, we could see a decline in both the topline and bottomline in Nifty companies on a YoY basis. Analysts will rework their FY21 estimates lower after Q4FY20 results and management commentary.

Will margins benefit from lower input costs?

Margins in some sectors could improve due to soft raw material prices. However, this advantage could be partly nullified by lower operating leverage, especially due to lockdown in the last 10-11 days of March.

Which sectors may be relatively better, which will be worst affected?

Telecom would report better performance due to tariff hike wef December and higher data usage in March, both of which could pull up the average revenue per users (ARPUs) of telecom companies. FMCG (essential categories) could do well, aided by lower input costs. Pharma companies could report better numbers but their Q1FY21 performance could get impacted due to lack of patient visits to doctors and delayed surgeries and also disruption in manufacturing. City Gas distribution companies could do well, especially those who are less dependent on CNG volumes.

Byju's, Toppr close social distance as demand for online education spikes

Edtech brands offer discounts, add fresh content and engage more frequently with users.

Over the past fortnight as students across the country and across age groups have been forced to rely increasingly on online learning, educational tech or edtech brands have been drawn under the spotlight. Byju’s, Toppr, upGrad and Lido Learning, among others, have seen a sharp rise in student engagement and enquiries on their platforms. And to make the most of the demand pull in the time of a countrywide lockdown, these brands have stepped in with attractive offers, extensions and a host of user engagement initiatives, hoping that this is the best time to bridge the digital gaps on internet’s educational highway.

Some brands have made their content free, unlocking what used to be hitherto premium access, while many have launched short, engaging content, hoping to hook first timers on to their platforms. Byju’s has made the learning app free for all students till the end of April. Similarly, an after-school personalised learning app, Toppr has made its ‘live’ and ‘video’ classes free for students from class 5 to class 12. Higher education platform, upGrad has opened up its ‘live platform’ to colleges, universities, NGOs and government agencies.

This is the edtech moment say experts. Much as demonetisation was the turning point for fintech brands, the present lockdown will give online learning its biggest boost ever, believes N Chandramouli, CEO of TRA Research. While the benefits and convenience of digital learning may have been evident for a while, its importance was never driven home as sharply as is being done now. With students being restricted to their homes and being tutored by parents, there is an educational gap that must be filled. And since parents don't want their children to lose out, they are more open to edtech platforms he pointed out. “The edtech brands have come out at the right time (with their offers),” Chandramouli added.

“Since our announcement, there is a 60 per cent increase in the number of new students using the app daily. The number of queries from students and parents have more than doubled in the past week,” said Divya Gokulnath, co-founder and director, Byju’s. The numbers have zoomed for Toppr too according Zishaan Hayath, its founder and CEO. The platform has seen a 50 per cent growth in subscribers for its ‘live’ classes. “Students are also spending more time on all modules, with the highest growth on ‘Ask Doubts’ module,” he added.