Corporate India keeps momentum going

THIRD QUARTER ROUND-UP

India Inc has done extremely well during the quarter ended December 2006, with the net profit of 1,070 companies jumping 73 per cent on the back of a 29 per cent growth in sales.

In the second quarter, these companies had posted a net sales growth of 34.1 per cent, while their net profit had increased by 54.2 per cent. The sales of these companies increased by 28.2 per cent, while they clocked a net profit growth of 19.6 per cent in the first quarter.

The record performance has many more bright spots. Over 300 companies have recorded their last year's performance in just nine months of the current year. The companies have aggregated a net profit of Rs 32,783 crore in the nine months of the current year compared with a net profit of Rs 22,418 crore in the whole year of 2005-06, recording a 46 per cent growth.

Their performance has been consistent, posting a profit growth of over 100 per cent each in all the three quarters of the current year. Of the 303 companies, 88 have excelled by achieving a net profit growth of over 100 per cent each over their net profit in the whole year of 2005-06.

The big achievers include six Sensex companies "� Bharti Airtel, Infosys Technologies, Wipro, Hindalco, Grasim and Dr Reddy's Laboratories. Among them, the nine-month net profit of Dr Reddy's is higher by 330 per cent over its full-year profit.

Among the leaders, 57 companies have achieved a record feat of posting over 100 per cent growth in net profit in all the three quarters. They achieved a net profit growth of 300 per cent in each of the three quarters. The growth in their net profit was supported by a jump in sales, up over 80 per cent in all the three quarters.

The list of big performers includes companies from cement, realty, engineering, software, pharmaceuticals, capital goods and construction. Most of them have benefited from higher price realisation of their products.

The cement, construction, metals and realty firms increased their product prices on the back of a buoyant demand.

However, the 30-scrip BSE Sensex companies have underperformed the corporate sector as a whole. The 21 Sensex companies achieved a 35.5 per cent rise in sales and 42.7 per cent increase in net profit. In contrast, the corporate sector as a whole (a sample of 1,000 companies) posted a robust 73 per cent jump in profit and 29 per cent growth in sales.

State Bank of India, Satyam Computer, Bajaj Auto, Cipla, Maruti Udyog and Tata Motors were the laggards among the Sensex companies. The net profit of SBI and Satyam Computer declined during the December 2006 quarter, while Bajaj Auto (net profit up 23.7 per cent), Cipla (up 5 per cent), Tata Motors and Maruti Udyog (up 11 per cent each) underperformed the corporate sector by posting a lower growth in profits.

Among the Sensex companies, Dr Reddy's Laboratories has done extremely well, posting a net profit growth of over 100 per cent each in all the three quarters. Dr Reddy's net profit zoomed 828 per cent in the third quarter, while it soared 154 per cent in the second quarter and saw a 108 per cent increase in the first quarter of the current financial year.

Among the banks, SBI disappointed by posting a marginal 1.3 per cent rise in revenues and 4.5 per cent decline in net profit. ICICI Bank did well, posting a 60 per cent growth in revenues and 42 per cent rise in net profit.

The excellent performance was not just limited to large companies. Many mid-cap companies have done well and outperformed the Sensex and the small-cap firms in terms of growth in net profit in the quarter ended December 2006.

A total 164 firms, part of the BSE Mid-Cap Index, have posted an aggregate net profit growth of 92 per cent compared with 42 per cent rise reported by the Sensex companies and 81 per cent increase clocked by small-cap firms.

Small-cap firms, the constituents of the BSE Small-Cap Index, have outperformed the Sensex as well as the mid-cap companies in sales growth rate.

The 213 companies from the small-cap category posted aggregate sales growth of 45 per cent compared with 35 per cent and 23 per cent growth reported by the Sensex and the mid-cap firms, respectively.

Meanwhile, 26 firms have turned around during the third quarter after reporting net losses in the first two quarters of 2006-07. Jet Airways, NDTV, IBP, Hindustan Organic, Force Motors, Cable Corporation, SBI Home Finance and Uniflex Cables were back in the black after net losses in the first two quarters.

The 26 companies posted aggregate net profit of Rs 823.80 crore in the December 2006 quarter against net losses of Rs 557.05 crore in the first quarter and Rs 253.98 crore in the second quarter.