Early birds on a high post profits spike

Some big boys disappoint, but India Inc’s Oct-Dec show has been impressive.

Bharti Airtel and Larsen & Toubro may have struck a jarring note by turning in disappointing results, but India Inc as a whole has done fairly well so far in the third quarter ending December 2009.

An analysis of the results of the early birds (453 companies have declared their results till today) show that the net profit of companies in the manufacturing and services sector has gone up 48 per cent compared to the corresponding period last year.

If the results of Bharti Airtel and Larsen & Toubro (L&T) are excluded, the net profit of the remaining companies is up over 60 per cent.

Net sales of the 453 companies have increased 25 per cent and operating margins look impressive at 15.81 per cent, up from 11.18 per cent year-on-year.

Analysts attribute the sharp increase in net profit to the low base effect.

The net profit of the sample companies had fallen 33 per cent in the quarter ended December 2008.

Automobiles, auto ancillaries, steel and sugar companies were the stars in the third quarter as they benefited from the stimulus packages and the rise in product prices.

The six sugar companies, including Shree Renuka Sugar, Bajaj Hindusthan and Triveni Engineering aggregated a net profit of Rs 514 crore compared to a net loss of Rs 17 crore as sugar prices on an average went up by 82 per cent.

Automobile companies recorded 212 per cent rise in net profit year-on-year, but more or less flat over the sequential quarter.

Steel companies reported a spectacular turnaround during the quarter with a net profit of Rs 700 crore.

Among others, GAIL, MRPL, Exide Industries and Sesa Goa put up a robust show with net profit growth of over 100 per cent each, during the quarter ended December 2009.

The performance of Reliance has been in line with the expectations as the company reported 93 per cent growth in sales and a 16 per cent rise in net profit.
 

THIRD QUARTER PERFORMANCE    (Figures in Rs crore)
Qtr ended	Sales	% chg*	Net profit	% chg*
Dec 2007	1,83,173	-	34,513	-
Dec 2008	1,98,035	8.11	23,176	-32.85
Dec 2009	2,47,692	25.07	34,293	47.97
* year on year

The operating margin of the oil and gas major, however, fell sharply to 2.87 per cent in the quarter under review from 9.51 per cent in the quarter ended December 2008. The company posted a marginal rise of 71 basis points in margins in the petrochemical business.

L&T disappointed the market with 6 per cent decline in net sales, chiefly due to execution delays, indicated analysts. The net profit, including extraordinary profit of the previous quarter declined 50 per cent.

Some analysts said the net profit of the sample companies do not look that impressive when compared to that in the quarter ended December 2007. Profit, in fact, is almost a per cent down from that reported during the quarter ended December 2007 (see table).

The third quarter net profit is also lower by almost three per cent compared to the previous quarter ended September 2009.

Analysts said India Inc may be under pressure on the margins front going forward, as the prices of international commodities have been on the rise.

For steel companies, for example, the net profit for the quarter is 30 per cent lower compared to Rs 992 crore earned during the quarter ended December 2007.

This means, though steel prices rose significantly over the same period last year, they are still down 30-40 per cent from the peak period.
 

BHARTI AIRTEL

Shares gain 2.37% over last close to trade at Rs 329.80 on BSE
Weighed down heavily by low tariff and severe competition, total revenue, according to US accounting rules, rose by over 1% to Rs 9,772.20 crore during December quarter, from Rs 9,633.4 crore last year.
According to the Indian accounting norms, Bharti Airtel posted over 13% increase in net profit at Rs 2,236.90 crore. The total income rose to Rs 10,327.57 crore during the quarter, from Rs 9,688.5 crore year ago.

RIL

Shares gain over 1% to Rs 1,070 on BSE
Reliance today reported its first increase in net profit in five quarters - a 15.8% rise to Rs 4,008 crore in the period ended December 31.
Net profit in October-December quarter at Rs 4,008 crore was up 15.77% over Rs 3,462 crore in the year-ago period.
For the nine months ended December 31, RIL’s net profit dropped 1.33% to Rs 11,526 crore. Its net turnover rose to Rs 1,34,891 crore at the end of December 2009, from Rs 1,15,765 crore a year ago.