Covid-19 impact: EBIDTA of 159 listed companies down 15% in March quarter

About 159 Companies out of top BSE 300 Indian companies have on an average seen 15 per cent decline in their EBIDTA during the March quarter due to Covid-19, a new EY India report has revealed.

These 159 companies are those that had declared their March quarter results as on June 5, which was the cut off date for the EY India study as regards Indian companies.

Their aggregated EBIDTA ( Earnings before interest, depreciation and taxation) declined by ₹22,938 crore in the March quarter compared to the preceding December 2019 quarter.

Noting that overall impact of the Covid-19 outbreak on the Indian and global economy will depend on the duration and severity of the crisis, this report titled 'Early Impacts of the Covid-19 pandemic on Indian corporate reporting' also revealed that 159 of top 300 BSE companies analysed by EY India had seen aggregate provision increase of about ₹25,000 crore due to Covid-19 impact in March 2020 quarter. Most of the additional provisioning is driven by expected loss on amounts recoverable and writing down of inventory. BFSI sector accounts for the largest share where the credit loss provisioning is ₹16,873 crore.

EY India reviewed March quarter reporting of top BSE 300 Indian companies and 115 global companies spanning over 12 sectors to evaluate the impact of Covid-19 disruptions on their reporting calendar, profitability, financial position, liquidity, disclosures and other key parameters.

The objective of the study was to understand the impacts across different sectors and changes in other macro-economic factors during this period.

The analysis highlighted that most of the companies, across sectors, have experienced a material impact, on some if not all key financial performance indicators such as EBITDA, revenue, debt and interest service coverage, provisions, profitability as well as earning per share (EPS). The sectors experiencing the significant negative influence of pandemic and unfavourable macro-economic changes are BFSI, aviation, automotive, power, oil and gas and travel. Pharmaceuticals, Healthcare and Telecom (barring AGR dues provisions) have shown positive growth during these difficult times.

Sandip Khetan, Partner and National Leader, Financial Accounting Advisory Services (FAAS), EY India said, “Corporate reporting has become key, like never before, to earn the trust of the investors and other stakeholders, particularly in the current environment where stakeholders are seeking information on the disruptions of the current financial standing of an organization due to Covid-19. We are witnessing a significant shift in investor communication strategies, content and frequency by companies during COVID times.”

The study also reveals that there have been significant deferrals in reporting March 2020 quarterly results (on account of timeline extension by SEBI twice) as compared to March 2019. It is notable that as on June 5 , 2020, 141 out of BSE 300 companies (47 per cent) were yet to declare their results. 66 out of 159 companies’ studied were delayed by more than tendays, while 41 companies were managed to announce results for March 2020 earlier compared to March 2019.