Home > Financial Performance, Financial Results > September 2010 Quarter Financial results

September 2010 Quarter Financial results

“The deceleration in the country’s industrial production growth is a cause of concern, but whether it actually indicates the slowing of the growth momentum is yet to be ascertained”, said the RBI Deputy Governor, Dr Subir Gokarn.

India’s Index of Industrial Production grew at 4.4 per cent in September 2010. This has led to a number of people speculating whether the slowdown in India’s growth has begun.

Well, I believe that in addition to the IIP, quarterly financial performance of Corporate India also reflects the demand situation in the country. Hence, we aggregated financial performance of 197 companies (due to unavailability of data for 3 companies) forming a part of BSE 200 companies set.

Quarterly Financial Performance of BSE 200 companies (% yoy growth)

 

Sep-09

Sep-10

Net sales

-8.0%

20.3%

    Raw materials, stores & purchase of finished goods

-17.9%

20.9%

    Salaries and wages

3.1%

26.9%

    Power & fuel

3.9%

11.7%

    Interest expenses

7.5%

4.6%

    Depreciation

22.5%

29.3%

    Total tax provision

18.8%

34.2%

Net profit

42.3%

47.3%

    PAT/Total income (Net Profit Margin)

11.2%

13.7%

 After three quarters of a yoy decline, net sales of the  BSE 200 companies rose from the quarter ended December 2009. Net sales grew by 20.3%, the slowest in the past three quarters i.e. March, June and September 2010. This can be partially attributed to the comparatively high base in the September 2009 quarter. 

Compared to Net sales growth, the IIP has grown by 8.7% growth during the September 2010 quarter vis-à-vis the year-ago period.

  No of companies included Net sales (yoy growth) Net profit (yoy growth) Net Profit Margin (Sep 09) Net Profit Margin (Sep 10)
Automobiles & auto ancillaries

10

33.5%

6.4%

11.2%

8.9%

Banking Services

23

16.6%

19.3%

14.0%

14.3%

Cement

6

13.4%

-69.1%

17.3%

4.7%

Construction & allied activity

13

14.6%

-22.4%

12.7%

8.6%

Energy (excluding crude & petroleum)

15

24.6%

11.8%

18.9%

17.0%

Financial Services (other than Banking)

15

15.4%

24.8%

25.7%

27.8%

FMCG

11

18.0%

-0.1%

16.8%

14.2%

Logistics

8

11.1%

35.7%

10.1%

12.4%

Machinery

9

23.6%

0.0%

10.5%

10.8%

Metals & Minerals

17

14.6%

26.2%

14.9%

16.4%

Crude oil & petroleum

11

24.0%

115.1%

5.2%

8.9%

Drugs & Pharmaceuticals

11

10.5%

795.5%

18.9%

152.9%

Software services

11

19.7%

8.9%

24.9%

22.7%

Telecom services

7

9.5%

-51.7%

13.7%

6.1%

Source: CMIE; Note: The list of sectors is not exhaustive

 A sharp 40.1% rise in raw material cost led to a moderate 6.4% increase in net profit of the ten automobile companies.

  • The sample set of BSE 200 companies include 23 banking service providers. Union Bank and Uco Bank were the two banks included in the sample to have recorded a decline in profits. On an aggregate basis banks managed to curtail their expenses and record a higher net profit margin.
  • Of the six cement companies, only Ultratech Cement and Century Textiles & Industries managed to record a sales growth. Slow construction activity on account of a good monsoon vis-à-vis last year led to lower despatches. All the companies recorded a fall in net profit.
  • The construction companies also staged a poor profit performance during the September quarter.
  • Financial services segment excludes the banking service providers and includes automobile/house/infrastructure/asset financing services and stock broking services. Reliance Capital pulled down the aggregate revenues of this segment.
  • The downturn in the sugar industry cycle (reflected by Shree Renuka Sugars and Balrampur Chini) led to a marginal decline in net profits of the fast moving consumer goods segment. We have include the food & beverage, personal care and paints under this head.
  • An improvement in the performance of most shipping companies, the logistics segment recorded higher profitability in September 2010 compared to the year-ago quarter.
  • The nine machinery manufacturing companies recorded a healthy growth in both topline as well as bottomline, mainly steered by the surging demand power equipments in the country.
  • Raw material costs of the metals & minerals industry rose at a slower pace vis-à-vis sales, resulting in an higher profit margins.
  • MMTC, the company that trades in metals & minerals registered a robust 78.7% increase in its sales. However, due to higher costs, it could not manage to improve its bottomline.
  • The top four companies by sales value belong to the petroleum products industry. Of the nine companies forming a part of the crude oil and petroleum products segment, four are upstream companies while the remaining are downstream petroleum companies. De-regulation of petrol prices and hike in diesel prices enabled the government owned petroleum refineries to record over 6% net profit margin. This augurs well when compared to net losses posted by HPCL and BPCL in the year-ago quarter.
  • In line with expectations, the telecom service providers could not manage to curtail declining losses. Falling average revenue per user (ARPU) and Minutes of usage (MoU) together with decline in tariffs resulted in a moderate 9.5% growth in revenues. This is in spite of rising number of telecom subscribers in the nation.

Hence, looking at the current financial performance of the sample set of BSE200 companies, it seems too early to state if the industry cycle has started its downward journey. However, one thing which seems evident is that this quarter has witnessed slightly slower growth compared to previous two quarters. It can be because of the monsoon season or it may just be an indication of a slower investment cycle.

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