The Hindu Business Line : Sept quarter scorecard: So far, so good

Snapshot
Though ‘other income’ has aided profit growth, lower input costs have also helped
So far only three Sensex companies have declared Sept quarter results
Large cap cos from the metals, oil and real estate sectors yet to reveal numbers

Srividhya Sivakumar

BL Research Bureau Are the worst of the growth pangs over for India Inc?

The initial set of earnings announcements for the September quarter certainly suggests so. The 97 companies (excluding banks and finance), that have so far declared their numbers have managed a respectable 19 per cent growth in their net profits when compared with the corresponding quarter last year.

They also reported a four per cent growth in revenues, a key trouble spot over the last few quarters. Higher ‘other income’ helped by forex gains aided net profits, even as benefits from lower input costs lifted profit margins. While operating profit margins for these companies expanded by about 3 percentage points to 23 per cent compared with last year, the net profit margins improved to 17 per cent (15 per cent).

Sequential growth

On a sequential basis too, these companies appear to have improved their performance. While the revenue growth came in at 6 per cent compared with the June quarter, profit growth was a tad higher at 7 per cent. Base effect apart, increasing input costs and depreciation over the preceding March quarter seem to have moderated the sequential profit growth.

This perhaps may also explain the slight improvement in margins. Both operating profit and net profit margins have shown only a marginal growth sequentially.

Not the big picture

While the initial set of numbers for the quarter is encouraging, it nevertheless is too early to call it a reversal in corporate fortunes.

For one, the initial set of numbers has trickled in mainly from mid and small-sized companies, with only three Sensex companies so far unveiling their numbers.

Two, sectors such as textiles, engineering and mid-sized software have dominated the results so far. Sectors such as metals, oil and real estate, which dominate the large cap basket, are yet to unveil numbers.

As it is commodity companies are expected to fare badly this quarter, so the picture may undergo a substantial change as the earnings season progresses.

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