First 230-odd firms report over 20% rise in net profit, sales growth.
The third quarter results have started on an extremely positive note, with sales and net profit showing healthy growth of over 20 per cent each, despite a higher base year effect.
Operating margins are up 10 basis points on a yearly basis, thanks to tight cost control, as the total expenditure to sales ratio has eased by 15 bps.
The cost of raw materials, which moved at a slower pace of 16.87 per cent compared to sales growth rate of 19 per cent, helped manufacturers to show robust growth in net profit.
The healthy net profit growth has come from industry giants such as Reliance Industries, Tata Consultancy Services, Bharat Heavy Electricals, Bajaj Auto and State Bank of India.
| READY RECKONER Quarter ended December, 2010 (235 companies) | |||
| (In Rs crore) | Dec ‘09 | Dec ‘10 | % Chng |
| Sales | 2,11,839.00 | 2,55,455.30 | 20.59 |
| Other Income | 10,149.24 | 11,381.15 | 12.14 |
| OP | 74,452.35 | 89,566.94 | 20.3 |
| Interest | 32,829.70 | 38,928.05 | 18.58 |
| Gross profit | 41,622.65 | 50,638.89 | 21.66 |
| Depreciation | 5,668.05 | 6,563.78 | 15.8 |
| Tax | 9,327.71 | 11,332.35 | 21.49 |
| Net profit | 26,250.78 | 32,319.26 | 23.12 |
| OPM % | 35.15 | 35.06 | |
| GPM % | 19.65 | 19.82 | |
| NPM % | 12.39 | 12.65 | |
| Equity | 29,939.46 | 33,490.85 | - |
| Quarterly growth rate of 235 companies | |||
| Quarter ended | Sales | Net profit | |
| Dec ‘09 | 20.3 | 24.8 | |
| Mar ’10 | 32 | 29.6 | |
| Jun ’10 | 28.4 | 17.4 | |
| Sep ‘10 | 21.1 | 18.1 | |
| Dec ‘10 | 20.6 | 23.7 | |
As is known, corporate analysts have projected earnings growth of over 20 per cent in the third quarter and the early bird results so far have been in line with expectations.
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So far, 235 companies have announced their December 2010 quarter results and reported net profit growth of 23 per cent, to Rs 32,319 crore from the level of Rs 26,251 crore of the previous corresponding period.
The profit growth rate has been higher than in the first two quarters of the current financial year.
But total sales grew only 21 per cent, the slowest in the last four quarters.
More than half, or 126 companies, outperformed the total sample by reporting net profit growth of 25 per cent. The net profit of as many as 48 firms have more than doubled, 59 posted profit growth in the range of 25-100 per cent and 19 saw a turnaround.
Analysts expect refinery companies, which account for a fifth of total net profits of listed firms, to post a record quarterly profit, aided by strong improvement in gross refinery margins.
Banks, automobiles, fast moving consumer goods, pharmaceutical and packaging industries have done well by reporting 30 per cent growth in net profit.
Pay rises clipped the profitability of software services firms, reporting a 17.75 per cent rise in net profit despite revenue growth of 28.1 per cent.
Reliance Industries, the country’s largest listed company by market value, posted a 28 per cent rise in net profit on the back of robust performance in its refining and petrochemicals businesses. Three results from the automobiles segment have posted a 45 per cent rise in net profit on the back of strong volume growth.
Operating efficiencies and cost cutting helped information technology companies to report better than expected net profit growth.
A surge in credit demand offset higher provisions for bad loans, helping the banking sector to post healthy growth in net profit.
The rise in net interest income by 25 per cent helped 17 private and public sector banks to report 20 per cent jump in net profit.