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Rajalakshmi Sivam

BL Research Bureau For investors who would like to bank on the recovery, businesses that sell directly to the consumer or benefit from government spending seem to be the safe bets.

At least that is the message from the trends in sales growth of over 1,600 companies for the September quarter.

Sales for over 1,600 listed companies declined 9 per cent in the quarter against the 37 per cent growth in the same quarter the previous year.

However, sectors such as automobiles, FMCG, consumer durables, infrastructure defied the overall trend to post strong sales growth.

Sectors dependent on corporate spending — engineering and auto ancillaries — saw sluggish sales, while commodity makers suffered sharp dips.

Metal and steel companies saw depressed sales due to a fall in commodity prices compared to a high base last year.

Only half the 1,600 companies reported revenue growth in the September quarter. Almost a third saw less than 10 per cent growth in sales.

The sales picture was much better in the same quarter of 2008, with 8 of 10 companies seeing sales expand and over 80 per cent reporting a 15 per cent growth .

A fourth of the companies that reported strong expansion in sales this quarter are from sectors such as automobiles, consumer durables, cement and infrastructure that benefitted from healthy consumption or government stimulus. Farm loan waivers and pay hikes through the Sixth Pay Commission seem to have helped rural as well as urban spends. Both FMCG makers and manufacturers of durable goods notched up good sales growth.

Whirlpool of India reported a 34 per cent growth against 23 per cent of last year; Bajaj Electricals saw sales growth at 35 per cent (25 per cent). Sales growth in the cement sector can be attributed partially to volumes (13 per cent growth in despatches) and partially to prices (4 per cent increase).

Automobile players saw strong unit sales, helped partly by the stimulus and partly by a muted 9 per cent growth last year.

Realty proved an exception to strong sales trends in other consumer sectors. While prices have corrected, recent launches are yet to translate into revenues for players.

Metal and steel companies bore the brunt of falling realisations. The plunge in commodity prices globally forced these players to sell their output at reduced prices.

However, a few laggards displayed sequentially better sales. Metals (27 per cent sequential growth) and automobiles (16 per cent growth) stand out.

Overall sales also grew 8 per cent sequentially, offering hope for future quarters.

Capital goods and steel companies have also seen substantial recovery in sales from the June quarter.

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