In all, 701 companies across sectors (including financials & energy) reported net loss during the third quarter against 630 companies a year ago and 699 companies during the July-September 2018 quarter. Put together, the combined losses of these companies zoomed to Rs 65,922 crore during the third quarter from Rs 32,027 crore a year ago and Rs 43,060 crore during the second quarter of FY19.
As expected, companies took a hit on their profit margins during Q3 as expenses grew faster than revenues. The core operating profit margin for companies, excluding financials & energy, was down 90 basis points compared to the July-September 2018 quarter and nearly 300 basis points on a y-o-y basis to 12.9 per cent of net sales during Q3FY19.
Domestic market-focused companies, however, reported a 160-basis point expansion in operating profit margins on a sequential basis, while it was down 80 bps on y-o-y basis. One basis point is one-hundredth of a per cent.
Analysts attribute this to the recent moderation in energy (mainly crude oil) and commodity prices, lowering the input costs for companies in sectors such as FMCG, consumer durables, and automobiles.
"Crude oil is down nearly 28 per cent from its peak price in 2018. This should aid corporate margins in FY20 if the demand environment remains benign," said Chokkalingam.
Many lenders, especially public sector banks, also reported losses at net level during Q3. These include Bank of India, IDBI Bank, Bank of Maharashtra, United Bank (I), and UCO Bank, among others. Private lender IDFC First Bank too posted a net loss.
Domestic market-focussed companies also reported a slowdown in earnings led by sectors such as automobiles, telecom, and infrastructure companies.
In comparison, consumer goods companies such as Hindustan Unilever, Dabur, Britannia, and Nestle reported faster growth in revenue and earnings driven by higher public spending by the government besides a favourable base effect.
Among other key sectors, software exporters such as Tata Consultancy Services, Infosys, and Wipro reported faster growth in topline driven by gains from rupee depreciation in the last one year.