India Inc. Pulls Through

Recovery in distressed sectors such as banks and oil depict a much better picture of India Inc.

- Clifford Alvares

IF THE RECENT DECEMBER quarter results are an indication, India Inc., did not shiver through a wintery financial landscape after all. The impact of demonetisation has been restrained, while India, Inc., appears to have put up a much better show overall. During the initial days of the de-monetisation, gross domestic product (GDP) estimates were being cut drastically and analysts even expected GDP growth to slip below the five per cent mark. Markets expected profits of India, Inc., to dip substantially as consumption of some white goods, discretionary and utility companies shrank drastically.

But, it turns out, the figures are much plumper. An analysis of 1,275 companies which reported third quarter FY17 results proves otherwise. Year on year (y-o-y) revenue growth, at 8.6 per cent, has been higher. To gauge the impact of the demonetisation, growth figures were calculated for companies with revenues of more than Rs 50 crore. No contraction has been seen.

In fact, profit growth has surged sharply. The December quarter net profit for the companies analysed by BW Research zoomed 19 per cent over the corresponding previous year quarter. This, of course, could be attributed to the lower base.

However, quarter on quarter (q-o-q) figures have slightly declined. Profit growth in the December FY17 quarter dipped a mere 3.5 per cent. This stemmed from interest costs increasing over the last quarter. Quarter on quarter (q-o-q) revenue figures rose 4.6 percent over the September quarter due to higher realisations.