Only 47 of the nearly 2,000 companies that have reported their March quarter earnings have seen QoQ profit growth in the past four quarters.
ET Online
NEW DELHI: Investors’ wait to see revival in profit growth for India Inc is not going to end anytime soon.
At last count, only 47 of the nearly 2,000 companies that have reported their March quarter earnings have seen quarter-on-quarter profit growth in the past four quarters.
According to data compiled by ETMarkets.com as of May 24, aggregative net profit reported by 1,093 companies has plunged 23.04 per cent on a year-on-year basis to Rs 37,217 crore, which is down 34.06 per cent on a sequential basis.
Companies that have managed to maintain a steady record on this front include names like Reliance Industries, which surprised Dalal Street with 16 per cent year-on-year (YoY) profit growth at Rs 7,320 crore. The oil & gas major has been reporting profit sequentially in the last one year, data showed.
The other names include IndusInd Bank, Yes Bank, Dewan Housing Finance, Omaxe, LIC Housing Finance, Tata Elxsi, Hero MotoCorp, CanFin Homes, GIC Housing Finance, 8K Miles and Ahluwalia Contracts, among others.
A steady stream of profits on a QoQ basis indicates that these companies have robust business models, which responded well or delivered at a time when other companies were reeling under the pressure of global slowdown, shrinking growth and absence of capex or investment cycle.
Stocks related to the textile sector remained most profitable with 10 companies making it to the list of India’s most profitable companies, largely on account of strong margins and lower commodity prices.
“Textile as a sector is doing very well now as lower cotton prices have helped improve the margins,” Jyotivardhan Jaipuria, market expert, said in an interview with ET Now.
“But there is only one thing for textile in the long term, which one has to be worried about. That is the TPP or the trans-Pacific pack which has been signed and India is not part of it,” he said.
Hanil Era Textiles, Khatau Makanji Spinning, Swasti Vinayaka Synthetics, Wheel & Axle Textiles, Bhandari Hosiery Exports, Filatex India and Nandan Denim have managed to report QoQ profit growth in last one year.
Sectorally, auto ancillary companies have been the most successful in reporting QoQ profit growth, which include names like Automative Axles, Federal Mogul, Streel Strips, Harita Seating, Sundaram Brake and Wabco India. Hero MotoCorp from the two-wheeler space also makes it to the list.
“There are a host of companies on the auto ancillary side which might be small with total sales between Rs 200 crore and Rs 600 crore, which are doing well,” P Phani Sekhar, Fund Manager - PMS, Karvy Stock Broking, said in an interview with ET Now.
“They are doing the right thing by increasing their export contribution. For most of these companies, exports contribute almost 15 per cent to 30 per cent of revenue. I am reasonably confident on these companies, considering that commodity prices are quite subdued and valuations also seem to be in line,” he said.
Only three private sector banks made it to the list, which include IndusInd Bank, Yes Bank and Lakshmi Vilas Bank. But what stole the show was HFCs and NBFCs, which maintained their profitability in the last one year.
Almost eight HFCs/NBFCs reported QoQ rise in net profit in the last one year. They include names like LIC Housing Finance, Dewan Housing, Can Fin Homes, GIC Housing Finance, Rudraksh Cap-Tech, Capital Trust, Regency Trust and SKS Microfinance.
"We have seen a very strong trend in retail consumer lending, so banks and NBFCs in that space have continued to grow well," Amay Hattangadi, ED, Morgan Stanley Investment Management, said in an interview with ET Now.
"The microfinance segment has also continued to grow well. Within the financial space, this segment has continued to report very good corporate earnings,” he said.
Big boys such as Infosys, TCS, Wipro and HCL Technologies failed to make it to the list of most profitable companies for the quarter ended March 31, but midcap and smallcap names emerged big winners.
Four companies from the IT and software services segments made it to the list, including names like Tata Elxsi, Vakrangee, 8K Miles and HOV Services.
Most of the pharma stocks also made it to the list, which include names like TTK Healthcare, Gufic Biosciences, IOL Chemicals & Pharmaceuticals, Caplin Point Laboratories, Rubra Medicaments, Zenotech Laboratories and Sharbon Bio.
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