How a third of BSE 500 companies beat the slowdown

The results season has wound down and, at first glance, fiscal year 2014-15 (FY15) was a washout for corporate India. The 461 companies in the BSE 500 that close their books in March recorded sales growth of just 3.2 per cent, while profit fell 9.3 per cent over fiscal year 2013-14 (FY14).

But aggregates conceal more than they reveal. Many in the BSE 500 have bucked the slowdown. About a third (135) of the 461 companies saw their sales in FY15 exceed 15 per cent — five times the overall sales growth.

The list includes HDFC Bank, Ashok Leyland, and Just Dial. HDFC Bank, among the leaders in the banking sector, has been able to grow its loan book and maintain asset quality consistently even in a tough market.

Ashok Leyland benefited from improving commercial vehicle sales while search service provider Just Dial added strongly to its database of listings.

Of the 135 companies whose FY15 sales grew 15 per cent or more, 86, or nearly two-thirds, improved the growth over FY14. In contrast, 93 companies saw contraction in revenue in FY15, while another 52 grew sales at less than 5 per cent — these have pulled down overall sales growth.

It’s not just top-line growth that has been good for many. More than a third (172) of the set have either grown profits or reduced losses in excess of 20 per cent in 2014-15. Of these 172 companies, 129 saw their profit grow faster than in FY14. The profits of 48 companies, in fact, doubled in FY15; this list includes Century Plyboards, Lakshmi Vilas Bank and Essar Oil.

Strong volume growth, improved realisations and capacity expansion helped Century Ply, while South-based private bank Lakshmi Vilas Bank gained from branch expansion, a higher share of low-cost deposits and good loan growth. A low base in FY14 and lower finance costs helped Essar Oil, but the company also improved its operational performance in FY15 by registering a higher gross refining margin.

Even as peers such as Tata Motors and Mahindra & Mahindra struggled, Maruti Suzuki’s profit grew more than a third in FY15. Improving demand for passenger cars, successful launches, better realisations and an increase in market share benefited the auto major.

However, 172 firms reported a contraction in earnings in FY15, pulling down the overall profit.

The castings, forgings and fasteners sector is among those that did well in FY15. Major player Bharat Forge benefited from a revival in the auto industry and also did well in its non-auto and exports markets.

Stock broking companies such as IIFL, Motilal Oswal Financial Services, and Edelweiss Financial Services also did well, thanks to a buoyant stock market and growth in trading volumes.

Garment producers too had a good year with Kitex Garments benefiting from higher exports, and innerwear maker Page Industries continuing to capitalise on its strong position in the domestic market.

Unlike the software sector, the pharma sector lived up to its reputation of being a good defensive bet. This was helped by robust growth in the both the domestic and export markets, including the US. The depreciation in the rupee also helped. Companies such as Aurobindo Pharma, Ajanta Pharma and Lupin did very well in fiscal year 2014-15.

The companies that performed well in FY15 did not go unnoticed in the market. The shares of Ashok Leyland, Century Ply, Bharat Forge, Page Industries and Aurobindo Pharma either doubled or trebled in the past year.

In comparison, the BSE Sensex offered a return of 5 per cent, while the BSE 500 index offered a 9 per cent return.

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