A little more than 50% of the constituents of Nifty have
reported their March quarter results till date, and it isn’t looking good. Revenues
are down 6% while profits are down 5% compared to same time last year. Operating
profit, which indicates the operational efficiency of the company, was also
flat compared to last year. If you think markets are down and are looking for a
reason for them to go even further down, you have a good reason now. The fact
is, the results of our top companies, the companies that form part of our
benchmark index are nothing short of a disaster.
The worst performer has been Vedanta, reporting a
1268% decline in profits compared to last year on the back of a one-off non
cash impairment charges.
The Cement sector saw 31% reduction in profits though the
revenues did increase marginally by 3%. The operating profits fell by nearly 2%
and all cement companies lost over 25% of profits when compared to the previous
quarter, ACC lost the most with 41% reduction in profits.
The IT sector saw TCS lose 30% on that
big fat bonus payment, but HCL, Wipro and Infosys also
barely managed to show some growth in low single digits, even though
the sector saw a 9% growth in revenues.
The Financial Services
industry saw their profits grow by a paltry 7% primarily on account of the 2
PSBs showing nearly 55% dip in their profits even though the operating profits
rise by 20%. Of the companies, IDFC, IndusInd Bank, Kotak Mahindra Bank
and Yes Bank grew at over 25% in the same period, but ICICI
Bank & HDFC disappointed with a mere 13% & 10% growth in net
profit respectively.
Cairn slipped from a 3,000 cr. profit to a loss in the
quarter. The other big oil and gas player, Reliance Industries, saw
profits up 8.5% even as revenues declined by a third.
Maruti had impressive results, with a 60% growth in profits
while Hero Honda produced an average level of growth at 14%. This ensured that
the Automobile sector 45% increase
in their operating profits even though their revenues increased only 10%.
Telecom sector had an impressive quarter
clocking a growth of 80% in their earnings while revenues increased 14%. Their
operational efficiencies increased by a whopping 65%. Bharti Airtel had an
unbelievable growth in profits with 86% while Idea Cellular didn’t lag far
behind with a growth rate of 60%.
If you add all the profits and revenues of the companies that
have announced results so far, we are seeing a 6% and 5% drop in both revenues
and profits respectively.
Cairn is the biggest culprit on the profit front, having
reversed from profits to losses on oil and the PSBs also contributed to the
negative profit growth. Reliance too saw a revenue drop of over 40% for the
quarter, contributing primarily to the negative revenue growth. Even if you
removed these from the results of the others, revenue increases were only 8%
over the previous year, and profits of the rest went up by a meager 6%.
Are these numbers impressive? Hardly! What can be expected of
the rest? I would expect more of the same. These numbers are very disappointing
and unless the environment changes soon, achche din would be some time away.
