It’s not just Infosys. There are many companies that have surprised the Street by posting better-than-expected results for the quarter ended December. Of the 166 that have declared results so far, positive surprises have come from those in the IT, banking, oil & gas and consumer space (Infosys, HCL Tech, Reliance Industries, YES Bank and Bajaj Auto among key ones). Interestingly, the aggregate numbers suggest an improvement in the operational performance of these companies.
With 18.5 per cent growth in aggregate revenue, the average profit before interest, depreciation and tax of the 166 jumped 25.1 per cent over that in the year-ago quarter. This is even as other income (largely non-core) rose only five per cent. Even if we exclude Essar Oil, which reported a net profit of Rs 32 crore against a loss of Rs 3,986 crore in the year-ago quarter, aggregate revenue, PBIDT (profit before interest, depreciation & taxes) and net profit are up 14 per cent, 15 per cent and 16.6 per cent, respectively, on a year-on-year basis.
The breadth of results, too, is impressive. Almost 80 per cent of the firms have reported growth in profits, with six reporting turnaround. Among prominent firms, Sintex, NIIT Tech, Mahindra Life and Hero MotoCorp saw their profits fall 10 per cent year-on-year, while NIIT and JP Power Ventures slipped into the red.
| LOWER COSTS AID MARGINS | ||
| Aggregate results of 166 firms In Rs crore | Qtr ended Dec 12 | % chg y-o-y |
| Net sales | 238,596 | 18.5 |
| Total expenditure | 185,922 | 16.3 |
| Raw material consumed | 127,609 | 16.7 |
| PBIDT | 63,557 | 25.1 |
| Interest | 24,123 | 18.3 |
| Reported profit after tax | 25,761 | 42.4 |
| PBIDT: Profit before interest, depreciation and tax ; Total expenditure includes raw material consumed. Source: CapitaLine Plus Compiled by BS Research Bureau | ||
The numbers suggest companies were able to control their cost and, as a result, their operating profit was ahead of sales growth.
Though the list is small (these 166 companies account for about 25 per cent of the total market cap) to establish any trend, sectorally IT has done well. Nine IT firms have notched an average revenue growth of 17.3 per cent, with a strong 42 per cent average net profit jump. A pick-up in discretionary spends was the key growth driver for these companies. Most saw a sequential rise in realisations which aided revenue growth.
Banks and financial firms, too, particularly the private sector banks, performed well. Fourteen banks and financial institutions have declared results so far. A majority of these reported double-digit net income growth. The growth in net profit was strong, at 38 per cent — with Non-bank financial companies (NBFCs) clocking 71 per cent. “I think NBFCs have done well because, unlike earlier, there wasn’t much restriction on credit and the liquidity wasn’t very low in the December quarter,” says Sonam Udasi, head of research, IDBI Capital.
In the oil & gas space, both Reliance Industries and Essar Oil did well, with the former beating the Street by a wide gap. In the auto space, Bajaj Auto’s result did not excite, while Hero’s was disappointing and far below estimates.
The start has been good, but analysts say next few weeks would be crucial for a trend to be established, since many companies are yet to announce their results.
