The performance of India Inc during the fourth quarter ended March 2017 seem to suggest that the industry has come out of demonetisation blues but their profitability continues to suffer, if banks, oil and gas and metals companies are excluded. Lack of other income has also had an impact.

However, overall performance has been in line with expectations and there is there is no major surprise according to analysts. Moreover, both large- as well as mid-caps have given mixed set of results, they added. In Q4FY17, consolidated sales of 204 companies from Nifty 500 grew 10 per cent year-on-year, which is a ten-year high, according to data provided by Capitaline on Tuesday. In the previous quarter (December 2016), sales had risen 6.6 per cent year-on-year.

“Volume growth has been better than expected as demonetisation impact has faded. Discretionary consumption sectors (jewellery, paints, consumer electricals and cement) have reported better than expected volumes,” said Motilal Oswal in a report.

However, operating profit has declined 9 per cent y-o-y and operating profit margin has tanked by 300 basis points due to margin contraction seen in most sectors except cement and metals.

Also, adjusted net profit growth halved in Q4FY17 to 5 per cent due to decline of 2 per cent in other income. In Q3FY17, other income had jumped 45 per cent, which helped adjusted net profit rise 9.2 per cent.

“There has been significant changes in reporting of other income coming from subsidiaries, fixed deposits and so on as per the new Indian Accounting Standards guidelines,” said a fund manager from top five domestic mutual fund.

Excluding other income, net profit growth has been better at 8.5 per cent y-o-y in Q4FY17.

Nifty companies have done better than their smaller counterparts with growth of 12 per cent and 6.3 per cent in sales and net profit respectively in Q4FY17, pointed out Motilal Oswal earlier in a report. While topline growth has been in line with estimates, profit growth is substantially higher than expectations, it added.

Among large companies Reliance Industries, Bharti Airtel, Kotak Mahindra Bank and TCS have performed better than expectations.