PUSH FOR A REBOUND

Companies garner record profits in July-September after four quarters of decline as cost reductions and revival in economic activity boost balance sheets; manufacturing firms steal the show

- NITI KIRAN

Corporate India is back with a bang!

In signs of economic recovery and in-dication of businesses returning back to normalcy, listed companies in India post-ed a combined net profit of ₹1.5 lakh crore during the July-September quarter — an all-time high and up nearly three times from the year-ago period. Excluding the contribution of extraordinary transactions, net profit of these 4,000 companies registered a 38.2 per cent year-on-year (y-o-y) growth after four quarters of double-digit contraction that also included a steep 40 per cent fall in the June quarter due to the nationwide lockdown.

However, even though profit growth is back after a year, top line still continues to slacken. Year-on-year revenue growth of the sample companies declined 6.9 per cent in Q2FY21 and 27 per cent in Q1FY21.

The trend is expected to continue in the next quarter due to further push in pent-up demand from the festive season and re-opening of the economy, says Vinod Nair, Head of Research at Geojit Financial Services. “Better profitability is also due to increasing selling prices of products and lower discounts. Demand has also increased for segments such as electronics, telecom and household items due to most people working from home,” he adds.

The Fiscal So far

The first-half fiscal numbers, however, paint a very different picture. Corporate earnings remained weak in the first six months with a 1.2 per cent fall in net profit compared to the year-ago period. Total income from operations plunged by 17.1 per cent, year-on-year.