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Commodities, poor demand hit cos' Q2 results: Study |
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MUMBAI: Fragile consumption demand, especially in the rural areas, weakness in investment-linked sectors and the meltdown in global commodity prices hurt India Inc during the July-September quarter with nearly 700 companies in aggregate reporting a revenue growth of a mere 1.3% to Rs 7.01 lakh crore. As a result, net profit of these companies, which does not include financial, oil companies and Vedanta, increased by just 8.2% on a yearly basis to Rs 56,461 crore. The net profit growth rate was slightly higher than the growth recorded in the preceding quarter, an analysis by Crisil Research showed.
"Corporate India's financial performance during Q2 indicates continued pressure on earnings growth and tepid revenue growth. Ebitda (earnings before interest, taxes, depreciation and amortization) margins improved by 32 basis points year-on-year (YoY) due to the benefit accruing from lower raw material and power costs despite employee and other fixed costs remaining high," said Prasad Koparkar, senior director, Crisil Research. Data showed that ebitda margin of these companies was 17.4% during the July-September quarter. On the sectoral front, "pharmaceuticals (especially mid-sized companies), power generation and telecom were the outperformers, while capital goods, steel, and sugar were laggards", he said.
The Crisil Research analysis showed that export-linked sectors had double-digit aggregate revenue growth, helped partly by the 6% depreciation in the rupee on a YoY basis. Among these sectors, IT services witnessed 6-7% annual growth in US dollar terms, while growth in the pharmaceuticals sector was led by the strong performance of mid-sized formulation companies.
Among the domestic-oriented sectors, revenues of utilities, mainly driven by the power industry, grew by 10% - the same rate at which the revenues of power generation companies increased, which was largely on account of higher generation. Revenues of power transmission companies grew by 18% compared to the year-ago period.
Among the laggards, the performance of metals industry was impacted primarily by the steel sector. Revenues of steel companies fell by 17% on account of weak demand, sharp fall in realizations and higher imports, the Crisil Research pointed out.
In the banking space, according to Koparkar, the performance of public sector banks continued to deteriorate with advances growing in single digits, gross non-performing assets (GNPAs) increasing by 59 basis points, net interest margins declining by 9 basis points and net profits falling marginally. "The performance of private sector banks has been relatively stronger," he said. Data showed advances growth for private banks, at 23.1%, was more than three times their public sector counterparts, while GNPAs increased by just 20 basis points and remain reasonably healthy at 2%.
Source : timesofindia.indiatimes.com
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