Early birds post 66% rise in net

Diwali is still four days away but corporate India is firing on all cylinders. If the early-bird results for the quarter ended September 2006 are any indication, India Inc may surpass all its previous earning records.

And the three pillars of growth are the software, cement and capital goods sectors.

The net profit of 111 companies that have announced results so far rose 66.03 per cent on the back of a 41.40 per cent rise in net sales. This is despite interest costs continuing to climb for the third successive quarter. The interest cost of these companies went up by 21.58 per cent.

The gross profits (profits before depreciation and taxation) of these companies rose 60.22 per cent, on the back of a 315 basis point increase in gross margins. One basis point is one hundredth of a percentage point. Indicating hefty profits, these companies also raised tax provisioning by 56.56 per cent.

The operating profit margin increased by 229 basis points to 25.33 per cent while the gross profit margin rose by 249 basis points to 24.08 per cent and the net profit margin by 261 basis points to 17.57 per cent.

"The early birds' performance is heavily biased toward software and cement companies but, overall, corporate earnings are on an upswing and we do not see any slowdown," said an analyst with an investment bank.

Infosys Technologies and TCS posted net profit growth rates of over 50 per cent each (on a standalone basis) and HCL Tech's net profit was up 130 per cent.

Among the cement companies, UltraTech Cement recorded a net profit of Rs 127.44 crore from Rs 10 lakh during the corresponding period last year.

Shree Cement's net was up 108 per cent, Sanghi Industries 276 per cent and Dalmia Cement 486 per cent.