Expectations of an improvement in the financial performance post implementation of goods and services tax have come true. According to data provided by Capitaline on an initial set of 102 companies (excluding banks, financial services, metals and oil and gas), which have announced their September quarter results, performance has improved year-on-year compared to the June quarter, especially on the profitability front.

Net sales have grown at a slower pace, at 12.4 per cent y-o-y in Q2 compared to 13.6 per cent in the June quarter as some sectors had seen higher demand in the June quarter amid de-stocking ahead of GST. Also many information technology companies have reported weak topline growth.

However, operating profit and adjusted net profit have risen by 17.6 per cent and 7.3 per cent y-o-y respectively in Q2, better than the 4.1 per cent and 5.3 per cent in Q1, respectively, due to relatively benign raw material costs and other overheads.

India Inc has not only come off well in terms of GST but it seems to be moving on from the pains of demonetisation. Net sales have grown 13.03 per cent in the first half of FY18 compared to 10 per cent in FY17. However, improvement in operating profit growth has been at a slower rate, at 11 per cent in H1, versus 10 per cent in FY17, as costs were higher y-o-y in the June 2017 quarter.

Adjusted net profit growth also slowed down to 6.3 per cent in first half compared to 9.7 per cent in FY17 as fixed costs such as interest and depreciation shot up in Q2.

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