For example, RIL, the country’s largest company in terms of revenue, profit, and market capitalisation, reported a net profit growth of 6.8 per cent YoY during Q1 — the lowest in the last 10 quarters. The company’s interest payment or debt servicing cost has been higher than the operating profit growth for eight consecutive quarters, as its multi-billion dollar investment in mobile telephony business is yet to generate adequate profits.
Software services exporters such as TCS, Infosys, and Wipro also reported a slowdown in earnings and revenue growth, in line with a deceleration in the world economy. The industry’s combined net profit was up 8.3 per cent YoY during the quarter, showing deceleration both on a sequential and YoY basis. The industry’s net sales growth at 10.9 per cent YoY was the lowest in five quarters.
Information technology players were the single-largest component of the early bird sample, accounting for nearly 40 per cent of the combined earnings and 27 per cent of the combined net sales.
On the brighter side, retail banks in the private sector outperformed the average company, with the exception of YES Bank.
For example, HDFC Bank’s net profit was up 21 per cent YoY, in line with its growth in the last two years, while IndusInd Bank reported 38.3 per cent YoY growth earnings during the quarter. Federal Bank and RBL Bank also reported strong double-digit growth in earnings during the quarter.
Analysts attribute this to banks’ ability to take away market share from retail non-bank lenders, most of which are facing difficulty in raising funds from the wholesale market to fund their operations.
“A part of the retail lending market has shifted to banks as non-banking financial companies are not getting funding as in the past. This should continue for at least a few quarters more,” said Dhananjay Sinha, head of strategy and chief economist, IDFC Securities.
Analysts, however, say it’s too early to judge overall performance of Corporate India based on early bird results, as most large companies in sectors that have been more affected by the slowdown, such as automobiles, consumer durables, capital goods, metals and mining, infrastructure, and telecom, are yet to declare their results
In rupee terms, early bird companies represent a third of India Inc, in terms of profit and 15 per cent in terms of revenue, based on listed companies’ average quarterly profits and revenues during FY19. In all, the early bird companies reported net profit of Rs 38,641 crore and Rs 3.01 trillion.