The early birds have set a scorching pace in the quarter ended March 2007, with around 120 companies posting a 28.6 per cent rise in sales and a hefty 57.8 per cent rise in net profit.

But analysts are not celebrating yet. Reason: the companies that have declared results so far have been good performers traditionally. In the last three quarters in a row, these companies posted sales growth of 36 per cent and profit growth of over 50 per cent. Analysts have also taken a cautious approach for other reasons: hikes in the interest rate, the volatility of the rupee and the likely restrictions on external commercial borrowings may spoil the party in the first quarter of the new financial year.

Software companies dominate the list of early birds. The 22 software firms in the sample account for 50 per cent of the sales and 70 per cent of the profits of the 120 firms. Three cement firms have contributed eight per cent to the sales and 10 per cent to the profits from the list.

Interest cost continues to be a major concern and it has gone up by 8.3 per cent despite the nil interest outgo for software majors. The depreciation provision is up by a modest 5.1 per cent while the tax provision has gone up by 42.7 per cent.

What is encouraging is that the operating profit margins of these companies are the highest in the last eight quarters and have moved up by 277 basis points to 25 per cent. This is reflected in the growth in profits - up by 57.8 per cent compared with a sales growth rate of 28.6 per cent. But some of the other sectors may not do as well. For example, two-wheeler companies have shown a sluggish trend in the last three months on account of low demand. With sales realisations expected to be lower compared with those in the same period last year, Bajaj Auto and Hero Honda's performance may be under strain.

Going forward, analysts at JM Morgan Stanley, Merrill Lynch and Motilal Oswal Securities predict that the growth rate in the quarter ended March 2007 may not be as healthy as it was seen during the quarter ended December 2006 when corporate India had posted a record-breaking performance, showing a 67 per cent increase in net profit and 30 per cent increase in net sales.

According to Motilal Oswal, the Sensex companies are expected to report 22.2 per cent growth in sales and 32.6 per cent in net profit. JM Morgan Stanley and Merrill Lynch both expect 30 per cent growth in net profits while they differ on the sales growth rates. J M Morgan expects sales to grow at 19.9 per cent, while Merrill Lynch estimates sales growth at 24.3 per cent.

All the three say that the growth drivers will be cement, capital goods, information technology, private banks and telecom companies.

The growth laggards will continue to be refineries, two-wheelers, power and the State Bank of India.

Pharmaceuticals companies are expected to report a mixed quarter. Among companies in the fast-moving consumer goods industry, ITC is expected to show 20 per cent growth in sales and profit. Hindustan Lever may post single-digit growth in sales and its net profit growth rate is expected to be between 15 and 20 per cent.