Early birds soar with 60% sales growth

The early birds are flying high. Sales of companies that have so far announced results for the quarter ended March 2010 show 60 per cent growth, the highest in the past nine years.

The last time India Inc had posted over 60 per cent growth in net sales was in the June 2001 quarter.

A total of 185 firms have declared their quarterly numbers. Excluding banks and finance firms, the other 156 companies show a relatively modest 31 per cent net profit growth.

Better price realisation and lower interest cost led to the growth, though income from other sources declined. Interest cost dipped 11 per cent to Rs 1,522 crore from Rs 1,706 crore, while other income fell to Rs 2,288 crore against Rs 2,576 crore in the previous year’s quarter.

The same sample of companies had posted a 46 per cent jump in the previous, December 2009, quarter.

Profit margins, however, took a knock. While operating margins declined to 18 per cent from 21.8 per cent, net profit margins fell to 10.6 per cent from 13.2 per cent during the quarter

The sharp increase in the sales growth rate was predictably because of Reliance Industries (RIL), which more than doubled its revenue as it started booking sales of subsidiary Reliance Petroleum, after the two merged with effect from September 11, 2009. Excluding RIL, the sales growth rate of the 156 firms was 37 per cent.

The other star performers were MMTC, Hindustan Zinc and Sesa Goa, all of which reported over 60 per cent rise in net sales.

The net profit growth was driven largely by a stellar performance by the automobiles, non-ferrous metals, mining and cement sectors.

The aggregate net profit growth of these four sectors jumped 80 per cent, compared to the combined 16 per cent growth reported by the remaining sectors. Refineries, shipping and food products have reported single-digit growth in net profit during the quarter.

Two automobile companies posted 49 per cent net profit growth, led by sustained volume momentum across product segments, on account of purchases ahead of the anticipated excise duty rise in the Budget

Among the metals pack, Hindustan Zinc and Sesa Goa more than doubled their net profit, mainly because of improved realisations. The combined net sales of these two companies increased 97 per cent in the March 2010 quarter.

The other standout performers in net profit were Jindal Saw, HCL Technologies and MMTC, which posted over 70 per cent growth in net profit.