Weak corporate profit growth likely in second quarter, initial trend shows

The diminution successful nett maturation has travel successful the aftermath of a emergence successful expenses and input costs successful the 2nd quarter. The representation weakens further if the 10 banks successful the illustration are excluded. “A higher maturation successful expenses resulted successful debased maturation astatine 3.3 per cent successful nett profits of 187 companies, excluding banks, arsenic against a maturation of 23.2 per cent successful Q2 of 2023-24. This is indicative of higher input costs to a ample extent,” said Madan Sabnavis, Chief Economist, Bank of Baroda.

Sales maturation of 197 companies dipped to 7.3 per cent astatine Rs 592,367 crore successful Q2 of 2024-25 arsenic against 12.1 per cent (Rs 551,994 crore) a twelvemonth ago. However, maturation successful expenditure (excluding depreciation and interest) is higher astatine 8.6 per cent compared with 1.5 per cent successful Q2-FY23, BoB probe study said. Rating steadfast Crisil said gross maturation of 5-7 per cent for Q2 is apt to beryllium the slowest successful the past 16 quarters.

Among starring corporates, Reliance Industries Ltd (RIL), India’s largest steadfast successful presumption of marketplace capitalisation, posted a 3.62 per cent diminution successful nett net astatine Rs 19,101 crore for the 2nd 4th ended September 2024 arsenic against Rs 19,820 crore successful the aforesaid play a twelvemonth ago. Hindustan Unilever Ltd (HUL) reported a 3.86 per cent diminution successful the standalone nett net astatine Rs 2,612 crore for the 4th ended September 2024 (Q2) arsenic against Rs 2,717 crore successful the aforesaid play of past twelvemonth arsenic the “FMCG request witnessed a moderating growth”.

“In the September quarter, FMCG request witnessed moderating maturation successful municipality markets portion agrarian continued to retrieve gradually,” HUL CEO and Managing Director Rohit Jawa said connected Wednesday. TCS reported a emergence of 5 per cent successful its nett net to Rs 11,909 crore for the September quarter. “We saw the cautious trends of the past fewer quarters proceed to play retired successful this 4th arsenic well,” said K Krithivasan, MD and CEO of TCS.

Crisil said India Inc is estimated to person clocked a slower gross maturation of 5-7 per cent on-year for the 3 months ended September, marking the slowest gait successful the past 16 quarters, due to the fact that of stagnant show successful the operation vertical, which accounts for a 5th of India Inc’s revenue, too a diminution successful the concern commodities vertical and subdued maturation successful investment-linked sectors.

Crisil survey is based connected our investigation of 435 companies that relationship for astir fractional of the listed marketplace capitalisation. These companies posted 8.3 per cent maturation successful the April-June quarter.

“Revenue of concern commodities, concern and construction-linked sectors—collectively accounting for 38 per cent of our illustration set—grew lone 1 per cent, weighing down wide performance. The concern commodities sector, specified arsenic coal, saw a 6-7 per cent gross diminution owed to little ember offtake, coal-based powerfulness procreation and e-auction premiums,” said Pushan Sharma, Director- Research, CRISIL Market Intelligence and Analytics.

In the concern sector, the powerfulness conception (70 per cent gross contribution), grew conscionable 1 per cent arsenic above-normal monsoon reduced powerfulness demand. Among construction-linked sectors, alloy gross fell 2-3 per cent owed to terms driblet led by inexpensive Chinese imports, Crisil said.

However, Crisil said India Inc’s profitability is estimated to person improved 70-90 ground points (bps) on-year during the quarter. The wide net earlier interest, tax, depreciation and amortisation (Ebitda) for 435 companies grew 10 per cent on-year.

Among the apical 10 sectors, which relationship for 75 per cent of revenue, 8 saw Ebitda borderline expansion, led by export-linked sectors specified arsenic IT services and pharmaceuticals, investment-linked sectors specified arsenic power, and user discretionary sectors specified arsenic automotive and telecom services. The 2 sectors that faced borderline contraction were steel, owed to higher robust ore prices, and cement, owed to subdued pricing, Crisil said.

The RBI precocious projected a little GDP maturation of 7 per cent for Q2 of FY25 arsenic against 7.2 per cent for the afloat year. “India’s maturation communicative remains intact arsenic its cardinal drivers – depletion and concern request – are gaining momentum. Prospects of backstage consumption, the mainstay of aggregate demand, look agleam connected the backmost of improved cultivation outlook and agrarian demand,” RBI Governor Shaktikanta Das said astatine the monetary argumentation reappraisal earlier this month.