Corporate India continues to be on a roll. One hundred and seventy firms in manufacturing and services sectors that have announced their Q1 results so far have registered sales growth of 35 per cent and net profit growth of 54 per cent.
Their operating profit margins have risen 128 basis points to 24.65 per cent, while the net profit margins increased 178 basis points to 14.46 per cent.
This is largely on account of the stellar performance by Infosys Technologies, Wipro, ACC, India Cement, Hindustan Zinc, and 55 others that have clocked over 50 per cent growth in net profits.
"It may be too early to celebrate as the bulk of the results are from software firms, which have got the benefit of growth in business and fall in the rupee value over the last one year. The pack also includes profit-making cement and metal companies.
"The real health of India Inc will be known when refineries, steel, engineering, and automobile companies announce their results," pointed out the CFO of a large manufacturing company. Most of these companies are likely to be impacted by the rise in input costs.
Twenty companies on the list posted net losses, while 29 others registered a decline in net profits. Fertiliser and chemical firms particularly disappointed analysts, with GSFC, GNFC, Gujarat Alkalies, and Chemfab Alkalies registering a decline in net profits.
The other income of these 170 companies rose by 56 per cent. This boosted the net profits of Anant Raj Industries, Gail, Bharat Fertilisers, GSFC, and many others by accounting for over 50 per cent of their net profits.
Front-line companies such as Hero Honda, Infosys Technologies, and Wipro, too, registered a quantum jump in the other income during the quarter ended June 2006.
With the rising interest rates, the cost of borrowing continued its upward spiral, with the interest burden of the 170 early birds going up sharply by 28.7 per cent.
The depreciation provision was marginally up by 1.8 per cent as no major capital expenditure was undertaken by these companies. The tax provision for the 170 firms increased by 48.8 per cent.
India Cement led the list of companies that have put up a splendid show. Its quarterly net profit growth was 2,061 per cent at Rs 112.59 crore (Rs 1.13 billion).
Sakthi Sugar's net profit was up 1,688 per cent, followed by Hindustan Zinc (net profit up 491 per cent), Madras Aluminium, (262 per cent), McDowell & Co (234 per cent), ACC (85.99 per cent), Infosys Technologies (53 per cent) and Wipro (52.90 per cent).
