If the early indications are anything to go by, India Inc is set to post record top line growth during the quarter ending March 2006. Thus far, 750 companies in various sector (excluding banking and finance companies) have announced their quarterly results.
Collectively, they have reported 25 per cent growth in sales during the quarter over the previous corresponding period -- the highest since they started publishing quarterly results in March 1998.
Of course, the remaining companies that are yet to announce their results also have to post a similar performance for Corporate India to create history. The best top line growth thus far recorded was 23 per cent for the quarter ended in September 2004.
However, the September 2004 data related to 3,000 companies, while the latest data cover only 750 companies that have announced their quarterly results.
Since June 2004, for eight successive quarters, India Inc has been reporting double-digit growth in topline. The sample of 750 companies has reported aggregate sales of Rs 1,71,115 crore (Rs 1711.15 billion) in the March 2006 quarter against Rs 1,36,651 crore (Rs 1366.51 billion) in March 2005 quarter.
When it comes to bottom line, the growth is 35 per cent -- highest in the last four quarters. The aggregate net profit of these companies has increased to Rs 18,842 crore (Rs 188.42 billion) in March 2006, from Rs 13,907 crore (Rs 139.07 billion) in March 2005.
Higher sales growth, lower interest cost and rise in income from other sources have helped these companies post their highest net profit growth in last four quarters.
The interest burden during the quarter has declined marginally by 0.26 per cent to Rs 2,466 crore (Rs 24.66 billion) against Rs 2,473 crore (Rs 24.73 billion) in the corresponding quarter of the previous year, while other income has increased 22 per cent to Rs 4,526 crore {Rs 45.26 billion (Rs 3,708 crore (Rs 37.08 billion)}.
The operating profit of these companies has gone up 27 per cent to Rs 32,160 crore {Rs 321.6 billion (Rs 25,241 crore (Rs 252.41 billion)} and gross profit of 30 per cent to Rs 29,695 crore {Rs 296.95 billion (Rs 22,768 crore (Rs 227.68 billion)}. Their gross profit margins (GPM) and net profit margins (NPM) too have improved substantially.
The NPM increased by 83 basis points to 11.01 per cent in March 2006 quarter against 10.18 per cent in March 2005 quarter, while the GPM improved 69 basis points to 17.35 per cent (16.66 per cent) and OPM by 32 basis points to 18.79 per cent (18.47 per cent). One basis point is one hundredth of a percentage point.
Oil companies Reliance and BPCL have both posted over 30 per cent-plus sales growth. Non-ferrous metal companies such as Hindustan Zinc and Hindalco have seen strong growth in their top line.
HCL Technologies has seen its income almost double, while that of Wipro has gone up 70 per cent. Engineering majors Siemens and ABB have posted sales growth of 56 per cent and 32 per cent, respectively. Telecom major Bharti and auto ancillary MICO saw their sales increase by over 40 per cent.
As many as 22 out of 111 sectors tracked by the Business Standard Research Bureau have posted over 100 per cent growth in net profit. Eleven others have reported bottomline growth between 50-100 per cent and 46 sector between 25-50 per cent during the quarter.
Talking about individual companies, 125 firms have more than doubled their net profit while 62 others reported bottom line growth between 50 per cent and 100 per cent during the quarter.
As many as 68 companies staged turnaround in March 2006 quarter, while 38 firms slipped into the red. Sector-wise, tractors, packaging, ferro alloys, tea and coffee, steel strips/hot roll/cold roll and textile texturising sectors staged a turnaround during the quarter.
Cement, constructions, non-ferrous metals, refineries, print media, electronic equipment, telephone cables, domestic appliances white goods and breweries have posted over 100 per cent growth, while information technology, pharmaceuticals, retailing, hotels, sugar, automobiles two- and three-wheelers and aluminum sectors have reported hefty bottomline growth in the range of 40-100 per cent.
The most spectacular show has been staged by the housing construction sector. The aggregate net profit of eight companies in this sector has zoomed seven-fold, from Rs 10.24 crore (Rs 102 million) in March 2005 to Rs 78.97 crore (Rs 1789.7 million) in March 2006. Lok Housing and Constructions has posted record net profit growth in March quarter.
The company has reported net profit of Rs 22.26 crore (Rs 222.6 million) during the quarter against Rs 100,000 in previous year quarter. Seven non-ferrous metals companies have posted an aggregate net profit of Rs 846.03 crore {Rs 8.46 billion (Rs 249.56 crore (Rs 2.5 billion)}; two refineries Rs 1,778.50 {Rs 17.78 billion (Rs 576.20 (Rs 5.76 billion)}; three cement firms Rs 744.35 crore {Rs 7.44 billion (Rs 344.90 crore (Rs 3.45 billion)}; seven breweries and distilleries companies Rs 61.27 crore {Rs 612.7 million (Rs 68 lakh (Rs 6.8 million)} and two tyres firms Rs 27.82 crore {Rs 278.2 million (Rs 67 lakh (Rs 6.7 million)}.
Hindustan Copper, Hindustan Zinc, PTC India, ITI, Bajaj Hindustan, Ahmednagar Forgings, ICSA India, Venus Remedies, Prajay Engineers Syndicate, Morepen and Gillanders Arbuthnot & Company have reported over 100 per cent topline growth during the quarter.
The 68 companies that staged a turnaround have collectively reported net profit of Rs 222 crore (Rs 2.22 billion) against net loss of Rs 292 crore (Rs 2.92 billion) in the corresponding quarter of the previous year. Thirty-eight firms that slipped into the red posted net loss of Rs 243 crore (Rs 2.43 billion) against net profit of Rs 425 crore (Rs 4.25 billion).Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Discussion Group