June quarter results: Corporate India's growth ambitions hit a fresh bump

Corporate India’s growth ambitions hit a fresh bump in the April-June 2017 quarter. Consumption growth again took a knock after showing a mild recovery during the March 2017 quarter. The top line growth for consumer goods makers such as ITC, Hindustan Unilever and Asian Paints was the lowest in the past five quarters, barring the post-demonetisation lows in the December 2016 quarter, while net profit growth was the lowest in the past three years. Automakers did even worse and reported year-on-year decline in revenues and profits, as consumer delayed purchases on account of the goods and services tax (GST) during the quarter. 

Exporters such as information technology (IT) companies and drugmakers were the biggest laggards, reporting their worst top and bottom line growth in at least three years. Pharma companies’ top line shrunk for a consecutive quarter and their net profit halved during the quarter. IT majors such as Tata Consultancy Services, Infosys and Wipro escaped with low single-digit growth in top line but adjusted net profit declined marginally. 

In financials, private banks and non-banking finance companies continued to do well, though at a slower pace. In contrast, most public sector banks reported a further surge in their non-performing loans during the quarter, leading to a fresh knock on their profitability. This is likely to further hurt their ability to finance incremental corporate capex in the forthcoming quarters. 

Infrastructure and construction-related sectors were the bright spots during the quarter with improved revenue and profit growth. The revenue growth for cement makers, construction and engineering firms improved for a third consecutive quarter and profits growth was in high double digits.

(With inputs from Ram Prasad Sahu, Hamsini Karthik and Ujjval Jauhari)

Note: PBIDT: Profit before interest, depreciation and tax excludes other income; GNPA: Gross non-performing assets as percentage of total advances; CMP: current market price as of August 14, 2017; all figures are y-o-y change in % for the quarter ended June 2017; price change is year-to-date change; change in PBIDT & GNPA are in basis points; LTP: Loss to profit; PTL: Profit to loss; compiled by BS Research Bureau. Source Capitaline