Indian Cos’ Q1 net falls 12% since last qtr

Mumbai: More signs of a slowdown in the economy emerged in the second week of the first quarter results season. An analysis by Crisil Research of the April-June numbers announced by 208 large- and medium-sized companies shows that their revenues grew by 15.3% on a yearly basis while the net profit rose 8.4%.      The companies do not include banks and non-banking finance companies.      The picture looks even more alarming if one compares the results on quarterly basis. These 208 companies together have reported a 4.6% drop in revenues while their net profit slid by nearly 12% when compared to the fourth quarter of the last fiscal, the analysis showed. "Overall, sales growth remains weak on the back of slowing economy and decline in investment cycle. Poor monsoon and resultant higher inflation can further hurt growth, unless investments pick up," said Mukesh Agarwal, president, Crisil Research. "Higher interest costs — up 35% y-o-y — are also hurting the bottomline growth, which we expect to remain in single digit in the near term," he said.      The 15% yearly growth in revenues came on the back of a strong 30% revenue growth posted by IT and pharma companies. If one excludes the strong showing by these two sectors, the overall revenue growth falters to just 12.9%. A combination of lower revenues and higher expenses continues to impact EBITDA (gross profit) margins which are under severe pressure and have declined by close to 201 basis points (100 basis points = 1 percentage point) on a yearly basis and 132 basis points on a quarterly basis, the Crisil analysis showed.      Margins pressures are more pronounced in sectors like construction, auto components, commercial vehicles, steel and paper. FMCG companies have bucked the trend as their EBITDA margins have expanded by close to 130 basis points y-o-y, led by decline in input costs and price increases in both cigarettes and soaps &detergent segments.      In the banking segment, bad loans of the public sector banks have been on the rise and remain a matter of concern. Gross NPAs of these banks have increased to 2.7% from 2.4% in the previous quarter, with sectors like power, airlines and textiles showing more stress compared to others. Although the net profit growth of public sectors banks has been close to 22%, this is largely because of lower provisioning, the analysis showed. Compared to the state-run banks, some of the private sectors banks which have announced their results have shown improvement in their asset quality.