India’s benchmark indices have bounced back strongly from their September lows, helped by strong demand for stocks from domestic institutional investors. But even as mutual funds and insurance companies are betting big on a speedier pick-up in the country’s growth prospects, the wait may be far from over.

A first-cut analysis of India Inc’s September quarter performance indicates that the sluggish growth may be here to stay. The aggregate revenue of 154 companies (excluding banks, NBFCs and financial services firms), which have declared results so far, declined 12 per cent in September compared to the same period last year. This is despite two-thirds of these companies managing to increase revenue during the quarter. For the first half of the fiscal year, aggregate revenues fell by 10 per cent over the same period last year.

Silver lining As companies struggled to increase revenues, the downturn in global commodities markets was the only positive. The rout in commodity prices saw Indian companies save a tad more on their raw-material spend. Aggregate raw-material expenses as a percentage of revenue dropped from about 50 per cent in the September 2014 quarter to 39 per cent this September. This helped improve the aggregate operating profit margin by three percentage points to about 20 per cent during the quarter.

Despite a 5.2 per cent rise in aggregate operating profit, the growth in adjusted net profit for the 154 companies remained sedate at barely 2 per cent in the September quarter. This was due to a higher depreciation charge and marginal increase in tax outgo. For the first half of this fiscal year, the aggregate adjusted net profit after tax remained flat.

Makers of agricultural inputs such as fertilisers and agrochemicals saw their profitability dwindle in the September quarter on account of the weak monsoon. Likewise, the operating profit margin of companies in the construction and infrastructure development segments declined.

The sharp depreciation of the rupee against the dollar from 60 levels last September to around 64 this year did not help software exporters much. IT companies barely managed to maintain their operating margin at September 2014 levels. Traditionally perceived to be recession-proof, the software exports space is possibly bearing the brunt of the slowdown in Europe and a fall in global IT spends.

Raw-material-intensive sectors such as automobiles, auto components, consumer durables and FMCGs were clearly the key beneficiaries of the global commodity price correction. This is because the raw-material costs of most companies in these sectors account for over half of their total expenses.

Companies into crude refining and paint manufacturing gained from the weakness in global crude oil prices. Other sectors that managed to improve their profitability include pharmaceuticals, paper and logistics.

While the quarterly performance is not very exciting, it needs to be noted that many companies are yet to announce their numbers. Hence, the numbers could change by the end of the earnings season.

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