Results Till Now: Nifty Companies See 6% Drop In Revenues as Cement & Oil Players Falter

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.