Early birds' net profits surge 67%

Q3 winners: IT, Cement, Auto.

Cement, steel, information technology (IT) and automobile companies have done well in the quarter ended December 2004, propelling the aggregate net profit of 91 companies, which have declared results so far, to a robust 67 per cent.

These 91 companies reported sales growth of 24 per cent in the quarter ended December 2004 over the same period last year. The results, till now, have been in line with market expectations.

Operating profit margins increased by 300 basis points between December 2003 and December 2004, contributed by a 60 per cent rise in other income and a 15 per cent decline in interest costs.

But the margins of two-wheeler companies are rapidly shrinking, reflecting perhaps competition in the industry at a time when input costs are rising.

For instance, Hero Honda's net profit increased by a modest 8 per cent despite a 26.6 per cent rise in sales income in the December 2004 quarter.

The cost of raw materials as a percentage of sales increased from 57.8 per cent in the quarter ended December 2003 to 60.4 per cent in the quarter ended December 2004.

Higher provision for tax, apart from higher input costs, affected net profit growth. Hero Honda's operating profit margins declined from 19.3 per cent to 17.2 per cent.

The 12 software companies, which have reported quarterly numbers so far, reported a 50.7 per cent rise in net profit and a 37.6 per cent rise in sales.

Infosys Technologies posted a 45.6 per cent rise in sales and a 51.1 per cent rise in net profit. iGate Global Solutions, too, did well, with net profit growth of 218.5 per cent. Mastek, Aztec Software and Sonata Software also registered hefty net profit growth in the quarter ended December 2004.

In the cement sector, Ambuja Cement Eastern reported a net profit growth of 42.9 per cent on sales growth of 19.5 per cent. Chettinad Cement reported a significant reduction in its losses, from Rs 3.44 crore in the quarter ended December 2003 to Rs 1.98 crore in the quarter ended December 2004.

Of the 91 early birds, the best performance came from Neyveli Lignite (net profit up 93.7 per cent), Punjab Tractors (net up 55.6 per cent), Mercator Line (net up 316.4 per cent), Bajaj Hindusthan (net up 147.9 per cent) and Gujarat NRE Coke (net up 363.3 per cent).