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11/18/2016 Corporate India's net profits show healthy growth in Q2 FY17
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Out of BSE 500 companies, 291 companies excluding BFSIand Oil & Gas companies showed clear signs of improvementin bottom line in the second quarter of FY17. Net profit for thisgroup showed a healthy growth of 9 per cent over thecorresponding quarter last year. The yoy percentage growthin the same period last year was 2.61 per cent.
Automobile & ancillaries, capital goods, FMCG, steel, media &entertainment contributed to the growth in bottom line whileconsumer durables, pharma & healthcare, power and telecomwere laggards.
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Avneet Kaur Last Updated: November 17, 2016 | 18:42 IST
Corporate India's net pro懛ts show healthygrowth in Q2 FY17
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11/18/2016 Corporate India's net profits show healthy growth in Q2 FY17
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Operating profit also improved, registering a yoy growth of 10per cent compared to 6.67 per cent growth in the yearagoperiod. Operating profit is a measure of the company's ongoingbusiness conditions and shows how efficiently the business isbeing run. 145 of these 291 companies reported double digitprofit margins as compared to 130 companies a year ago.
Growth in gross sales however slipped from 8.15 per cent lastyear to 5.25 per cent in Q2 FY17. Net sales grew at 5 per cent,largely, in line with Q2 FY16.
Automobiles and ancillaries sector has slowed down with 19.32per cent growth in profit after tax as compared to 97.74 percent growth in the same period last year. Tata Motors is thecause with net losses to the tune of Rs 630 crore as against aloss of Rs 288 crore in the corresponding quarter last year.Eicher Motors has topped the sector with 19.92 per cent profitmargin. Maruti Suzuki has increased its revenues by 30 percent and profits have grown by 60 per cent yoy. "Festiveseason resulted in volume growth in sales of cars. Also, payoutof 7th Pay Commission increased consumption demand,"points out CARE Ratings in its Corporate Performance Q2FY17 report.
Revenues for the capital goods sector have shown a good jumpyoy, from 1.5 per cent last year to 10.8 per cent this year. Netprofits have grown at 52 per cent bottom line for these 291companies had almost doubled in the same period last year.Operating profits have shown a robust growth of 41 per cent.
Steel and iron revenues rose by 16.6 per cent, driven by JSWSteel's 22 per cent yoy rise. "Steel sector's performance wassupported by the government through imposition of antidumping duty on flat products and extended MIP (minimumimport price) on long products till December," says PrasadKoparkar, Senior Director, CRISIL Research. The sector saw agreat shift from losses of Rs 128 crore in September 2015 to netprofit of Rs 946 crore Q2 this year.
Consumer durables have disappointed the markets withbottom line dropping by 293 per cent yoy. Net profit for
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Videocon Industries has fallen from Rs 8 crore in Septemberlast year to a net loss of Rs 382 crore rupees this year. Profitmargins took a hit too.
Healthcare and pharma sector saw a meagre top line growth of3 per cent. Prominent players such as Cadila Healthcare, Cipla,Dr Reddy's Labs, Torrent Pharmaceuticals and AlembicPharmaceuticals saw fall in revenues over last year. Even ITsector saw a deterioration in top line growth 7.34 per centagainst 12.5 per cent last year. Operating profits slowed from9.71 per cent last year to 2.67 per cent this year.
Power saw a yoy fall in net profit by 10.38 per cent while inthe same period last year it had witnessed a growth of 47 percent. While profits for 7 out of 9 power companies declined,JSW Energy led with a fall of 103 per cent over last year.
Construction material, including cement, saw a boost in profitafter tax with yoy growth of 36 per cent in the quarter endedSeptember against a negligible growth of 0.9 per cent in thesame quarter last year. Sequentially, profits have howeverfallen by 24 per cent while revenues are down 10 per cent (overthe April to June quarter).
Among the top companies in terms of revenue, Indian OilCorporation has reported a profit after tax of Rs 3122 crore inthe September quarter against a loss of Rs 450 crore in thesame period last year.
Meanwhile, the central government's demonetisation move hasundoubtedly created chaos and it could hurt corporateperformance in the December quarter. It will affect the sectorswhere most activity is done through cash. Realty andconstruction material are expected to take a big hit.
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Figures derived from aggregates of 291 companies out of BSE 500excluding BFSI and Oil & Gas companies (Source: Ace Equity)
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