Helping You Build Wealth With Honest Research
Since 1996. Try Now

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Not a great quarter for India Inc.
Wed, 9 May Pre-Open

The result season is here again. FY12 has concluded and the annual performance of around 322 companies in front of us gives us enough flavor of what happened last year and what we might expect from this one. So let's take a look at how the various sectors have performed.

We will start with the outperformers. The Finance sector witnessed a turnaround during the quarter registering the highest year on year (YoY) bottomline growth across different sectors. Not just that, the operating margins witnessed a growth (YoY) for the first time in the year during the quarter.

Across the sectors, Software stocks registered the highest annual growth in the topline. However, sequentially, the growth has slowed down. At operating profit and net profit levels, the IT stocks registered second highest growth after the Finance segment. However, unlike the latter that has seen a sequential improvement in sales and profits, the software companies' performance left a lot to be desired.

The manufacturing sector* also witnessed good annual growth at the topline level during the quarter. Even after excluding Reliance Industries that posted reported exceptionally bad results, the operating margins for the sector declined (YoY) during the quarter. This was due to weakness in demand and increase in costs on an annual basis. However, sequentially, the quarter proved better at the bottomline level as annual net profit growth turned to positive from negative (in the previous two quarters).

Overall, out of 322 companies that have reported results, 45% reported a decline in the bottomline. Most of the sectors such as auto, cement, construction, oil & gas, metals and steel companies saw a sluggish growth at bottomline level while some respite was offered by banks and capital goods.

To summarize, the quarter confirmed the fears of a slowdown in demand coupled with an increase in raw material cost and depreciating rupee. Even if some savings are attained at cost level, the pricing power is at risk due to low demand. Many more companies are yet to declare results. Hence, one should not be surprised to see sales growth and margins slipping further down.

*Companies with raw material contributing to over a quarter of the topline

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "Not a great quarter for India Inc.". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Agora Research Private Limited.

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Agora Research Private Limited (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.