StatsGuru: 3-June-2013

Some troubles in corporate results, but also green shoots

There's both good and bad news for India Inc. Demand has been squeezed to such an extent that net sales of companies that have declared their quarterly results have on an average grown at only 7.3 per cent, as Table 1 shows. Meanwhile, growth in net profits has been declining, as Table 2 shows. However, there's been some good news: input costs have been shrinking, as Table 3 shows, because of cheaper fuel and softer commodity prices. Nor are there strong signs that employees' demands for higher wages are continuing to gather steam, at least going by year-on-year growth in employee expenses shown in Table 4.

That means net profit margins, shown in Table 5, have actually increased - and, in fact, have headed above the rate of inflation for the first time in a while. Meanwhile, it seems many companies have successfully managed to pare their debt - interest costs, as a percentage of profit before depreciation, interest and taxes (PBIDT), has declined, as shown in Table 6.

The sectors doing well and those that aren't are outlined in Table 7. Note how resource-heavy sectors are still pulling in massive margins, while steel, the backbone of manufacturing, struggles - as do labour-intensive textiles and telecom.

One interesting indicator some have flagged is the average depreciation allowance, which has gone up from 12 per cent to 18 per cent in the past quarter, as shown in Table 8. This might suggest that companies are, in fact, finally beginning to invest in new equipment. (Click here for table)