India Inc protects profitability in Q3 amid sluggish revenue growth
By Ranjit Shinde and Jaikishan Yadav
ET Intelligence Group: India Inc’s year-on-year revenue growth remained tepid in the December 2016 quarter while net profit grew in double digits following lower operating cost relative to sales, higher other income and lower base in the form of a profit fall in the previous year’s corresponding quarter. Net sales of a sample of 2,644 companies rose by 2.5% compared with 2% growth a quarter ago and 4.4% increase in the year-ago quarter. Net profit increased by 15.6%, helped by 1.7% drop in the corresponding quarter of the prior year. Profit had grown by 9.7% in the previous quarter.
The sample excludes companies from banking, finance, oil and gas sectors. A number of sectors reported a fall in either net sales or net profit or both. These include automobiles, construction, consumer durables and nondurables, Fertilisers, media and entertainment, paper, realty, retail, and textiles. Together, these sectors contributed nearly one-third to the sample’s total net sales.
Sectors including chemicals, diamond and jewellery, metals and mining showed better year-on-year sales growth during the quarter compared with that in the previous quarter.
The sample’s operating margin before depreciation improved by 70 basis points year-on-year to 15.6% reflecting India Inc’s focus on cost efficiency amid sluggish topline growth. The March quarter will be crucial since investors would search for signs of recovery in revenue since demand is expected to return to normal level as the cash availability in the economy returns to levels before the government’s drive to replace high denomination currency, which began on November 8.
ET Intelligence Group: India Inc’s year-on-year revenue growth remained tepid in the December 2016 quarter while net profit grew in double digits following lower operating cost relative to sales, higher other income and lower base in the form of a profit fall in the previous year’s corresponding quarter. Net sales of a sample of 2,644 companies rose by 2.5% compared with 2% growth a quarter ago and 4.4% increase in the year-ago quarter. Net profit increased by 15.6%, helped by 1.7% drop in the corresponding quarter of the prior year. Profit had grown by 9.7% in the previous quarter.
The sample excludes companies from banking, finance, oil and gas sectors. A number of sectors reported a fall in either net sales or net profit or both. These include automobiles, construction, consumer durables and nondurables, Fertilisers, media and entertainment, paper, realty, retail, and textiles. Together, these sectors contributed nearly one-third to the sample’s total net sales.
Sectors including chemicals, diamond and jewellery, metals and mining showed better year-on-year sales growth during the quarter compared with that in the previous quarter.
The sample’s operating margin before depreciation improved by 70 basis points year-on-year to 15.6% reflecting India Inc’s focus on cost efficiency amid sluggish topline growth. The March quarter will be crucial since investors would search for signs of recovery in revenue since demand is expected to return to normal level as the cash availability in the economy returns to levels before the government’s drive to replace high denomination currency, which began on November 8.
