India Inc Q3 Results Disappoint as Net Income Falls Over 6%

Mumbai: Economic indicators may be beginning to look up, but corporate earnings are not backing up on the macro-front with Q3 numbers being disappointing, according to the newly launched international rating agency ARC Ratings.

 

The deterioration in the financial condition of corporates in the just-concluded third quarter is especially steep, with net sales contracting by 0.2 per cent as against growth of a over 6.5 per cent in Q3 of FY14 while net profit declined by a steep 28.3 per cent compared to an over 2.5 per cent growth in Q3 of FY14, the agency said. 

 

The London-based ARC Ratings has partnered with the domestic agency Care Ratings.

 

Under the new GDP calculations, economy grew at 7.5 per cent in Q3 and is on course to clip at 7.4 per cent for the full fiscal, according to the latest government data. 

 

The report, which has tracked the performance of close to 3,000 corporates, both financial as well as non-financials, reveals a slackening performance of the corporate sector. 

 

The report said for data excluding the banking sector, the growth rates were minus 1.8 per cent against over 5.3 per cent growth last year and minus 36.6 per cent against over 9.1 per cent, respectively in December quarter of FY15.

 

The study has found out the large-sized firms, those with sales exceeding Rs 1,000 crore, which is 15.6 per cent of the sample, performed much better than smaller firms. These firms recorded a 4.8 per cent increase in net sales and 9.2 per cent growth in net profits.

 

Against this, small-sized firms, especially those with sales of under Rs 100 crore, which constitute 50 per cent of the sample, incurred losses. 

 

For the first three quarters, the aggregated financial data for 3,000 companies showed a muted 4.2 per cent growth in net sales, against 7.5 per cent in the same period last fiscal, while net profit growth inched up 3.3 per cent from 4.2 per cent a year earlier.

 

Excluding banks, deceleration was more pronounced with sales growth declining to 3.1 per cent from 6.7 per cent, and net profit growth falling to 0.9 per cent from 10.1 per cent.

 

The non-financial sector's lackluster performance in the first nine months of FY2015 was largely attributed to the "weakness of global and domestic demand conditions."

 

Among the sectors that bucked the trend include metals at 43.9 per cent (37.9 per cent) and telecoms at 9 per cent vs. 3.5 per cent, mining & minerals (25.4 per cent vs. 61.9 per cent), TV broadcasting and software (4.4 per cent vs. 12.7 per cent), oil exploration (25.1 per cent vs. 31.8 per cent)and tea/coffee (9.6 per cent vs. 13.5 per cent).