The improvement in India Inc’s performance in the December 2017 quarter was not limited to large companies (the Nifty 50) but trickled down to a broader swathe of India Inc. According to Capitaline data, net sales, operating profit and adjusted net profit of companies (excluding financial services and oil and gas) that are in the NSE 500 grew 8.4 per cent, 12.6 per cent and 14 per cent year-on-year, respectively, in the December 2017 quarter. As with the Nifty 50, while sales growth in this set has been the best in three quarters, profitability has been the best in four quarters. In the September 2017 quarter, sales and profit had grown 7.8 per cent and 3.1 per cent y-o-y respectively. “While the topline and bottomline growth has been lower than our estimates, the overall trend is higher, which is encouraging,” said the head of research of a broking firm.
If metals companies are excluded, the performance of India Inc has deteriorated. Net sales, operating profit and net profit have grown at a lower rate — of 6.4 per cent, 11 per cent and 10.5 per cent, respectively. “Commodities remained the bright spot with robust topline and profit growth on a high base,” pointed out Edelweiss Research in its results review, ‘The Big Picture: A mixed bag’.
Besides commodities, domestic consumption-oriented companies have also done well, helped by the lower base induced by the demonetisation effect. Export-oriented companies (information technology, pharmaceutical), banks and telecom have disappointed.
Broad-based growth
Companies such as Indiabulls Real Estate, Adani Transmission, Ballarpur Industries, Vakrangee and Hindustan Futuristic Communications led the topline growth while the net profit of companies such as Unichem Laboratories, Adani Transmission, Tata Motors, NHPC and Tata Chemicals jumped significantly.
The financial performance could deteriorate as sectors such as cement and automobiles, among others, could be affected if the commodity prices continue to remain elevated, analysts have warned.
Nine companies in the NSE 500 basket are yet to announce their results.