An analysis of 989 companies that account for 52 per cent of the total market capitalisation on the Bombay Stock Exchange shows net profit growth of 2.7 per cent over the previous year was reported mainly due to strong profit numbers registered by players in banking, cement, information technology, pharmaceuticals and fast moving consumer goods.
India Inc's quarterly net profit reached a record high of Rs 1.64 trillion in the third quarter ended December 31, 2020, mainly due to gains from higher commodity prices and a big swing in banks' earnings. The combined net profit of 3,323 listed companies that have declared results so far was up 68.6 per cent year-on-year (YoY). In comparison, earnings were up six times (534 per cent) in the second quarter and 6.5 per cent in the corresponding period last year.
The banking sector emerged as an outlier when the rest of India Inc witnessed a slowdown in earnings in FY23. The combined net profit of listed public and private sector banks was up 39.4 per cent year-on-year (YoY) last financial year and their share in India's gross value added (GVA) or gross domestic product (GDP) at factor cost rose to a record high of nearly 1 per cent up, from 0.8 per cent a year ago. Listed banks' combined net profit grew to Rs 2.36 trillion in FY23, from Rs 1.69 trillion a year ago. In comparison, India GVA at current prices was up 15.2 per cent YoY at Rs 247 trillion in FY23; it was around Rs 214 trillion a year ago.
While margins contracted by 30 basis points on y-o-y basis, they fell a sharper 120 basis points on a sequential basis to 16.8 per cent. Profitability was impacted adversely due to subdued demand, tepid realisations in commodity sectors, and negative operating leverage.
This was even as the country's economy grew by 7.3%.
'Our problem is not a budget deficit but a trust deficit. We need to trust our institutions and industries to innovate and lead. That is the way forward for India.'
Analysts now expect India Inc to report a decline in both top line and bottom line for the September quarter.
Brokerages expect revenue growth at a 7-quarter high but profitability may disappoint.
There, however, has been an improvement in operating margins.
The general elections could take a toll on the bottom lines of a host of Indian companies that have accessed overseas debt.
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Net profit grew 25.4% in Q4 but revenue growth, lower at 8.5%, suggests lack of volume expansion.
Adversity often brings out the best in companies, even state-owned ones. Faced with a bloated fuel bill, companies are busy devising new ways to control costs. These range from cut in travel to shift to cheaper fuels and even reduced recruitment. Power equipment maker Bharat Heavy Electricals Ltd has a brand new strategy in place -- it will set up onsite fabrication units rather than transport equipment over long distances.
Combined profit before tax of 81 firms down 37.5% y-o-y, worst show in at least 3 years.
A full-blown recovery remained elusive for India Inc in the July-September quarter, even as it overcame the challenge of achieving profitable growth.
India Inc did not perform well during December quarter.
That's because India does not have a serious venture capital industry with an appetite for risk, observes T N Ninan.
For debt-laden companies, asset sales is an obvious solution.
Mid- and small-cap companies seem to have done better than top-tier companies
Terming the country as a 'fraud haven' with about 60 per cent of the firms having detected frauds in past two years, global consultancy major KPMG on Tuesday. Making the situation even worse, at least 5 per cent companies have had losses exceeding Rs 10 crore and more than double of them have estimated the hit on their bottom lines in the range of Rs 1 crore to Rs 10 crore, KPMG said citing its 'India Fraud Survey Report 2008.'
The migration of domestically developed intellectual property to foreign corporations within India reflects an anomaly in the demand pattern of the country's job market, points out Kanika Datta.
The lockdown has taught companies a lesson or two on running business with fewer human resources. These lessons are unlikely to be forgotten, observes Mahesh Vyas.
Moreover, automobile and consumer durables players are slashing their ad expenditure by over 65 per cent this Diwali.
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The reason is believed to be a 19% increase in interest cost.
Sales expansion also down 4.4%
'The die is cast. The wave is for her.' 'We will win this. The numbers are going to be higher than people are saying.' 'It is going to be more closer to Obama's numbers than Biden's numbers.'
Our caste warriors will not even ask these questions, let alone explore better solutions to address the problems of inequality and skewed life outcomes, argues R Jagannathan.
It won't be easy for the banking sector to better its performance every quarter, predicts Tamal Bandyopadhyay.
It was women who unambiguously bore the brunt of the lockdown joblessness, says Kanika Datta.
While some companies used that to become world leaders, others squandered it by over-borrowing.
The benchmark indices have rallied 28 per cent this year, while the broader market has outperformed
Brokerages expect Nifty50 firms to post 11.8% growth in net profit in Q1 but sales may decline
'If the third wave of Covid infections is as bad as the second one, the market may get very polarised with a preference for blue-chips with low volatility.'
The top gainers on the Sensex are Gail(India), HDFC, Infosys.
Let all the stakeholders, especially the government, remember that if the Make in India lion needs to roar and rise again, it won't happen unless India Inc rises too, points out Shekaar Subramanian.
The S&P BSE Sensex closed at 26,190, up by 43 points and Nifty50 settled above 7,950 to end at 7,963, up by 17 points
At the immediate heart of the dispute is an inheritance that involves Rs 1,500 crore of shares that were bequeathed on a gift deed on a Rs 500 non-judicial stamp paper.
23 Nifty companies reported an annual decline in net profit.
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