India Inc's combined net profit in Q4 grew least in last 5 quarters

Listed companies’ combined net profits (adjusted for exceptional gains and losses) were up 11.4 per cent year-on-year (Y-o-Y) in the January-March 2024 (Q4FY24), growing at the 

slowest pace in the last five quarters.
 

For comparison, the combined net profits of 3,327 listed companies in the Business Standard sample were up 17.3 per cent Y-o-Y in Q4FY23 and increased 24.1 per cent Y-o-Y during October-December 2023 (Q3FY24).
 

The companies’ combined net profits climbed to Rs 3.56 trillion in Q4FY24, up from the Rs 3.2 trillion each in Q4FY23 and Q3FY24.

The incremental growth in earnings was driven largely by banks, finance and insurance companies (BFSI), and the automobile sector, while companies in other major sectors such as oil and gas, information-technology services, and fast-moving consumer goods (FMCG) faced slowdown in revenues and earnings.

The companies’ revenue growth, however, remains in the slow lane despite a small uptick in the fourth quarter. Combined net sales (gross interest income in the case of banks and non-bank lenders) were up 7.2 per cent Y-o-Y in Q4FY24, an improvement from the 6.4 per cent in Q3FY24; but revenue growth was in single digits for the fourth consecutive quarter.
 

Companies reported combined net sales of Rs 37.57 trillion in Q4FY24, up from the Rs 35.05 trillion in Q4FY24 and Rs 35.44 trillion in Q3FY24.

 

The non-BFSI firms did worse and their combined net sales were up 4.3 per cent Y-o-Y to Rs 29.92 trillion in Q4, an improvement from the 3.1 per cent in Q3. Similarly, the combined net sales of companies other than BFSI and oil and gas were up 4.8 per cent Y-o-Y in Q4FY24, up marginally from the 4.6 per cent Y-o-Y growth in Q3FY24.

These companies reported combined net sales of Rs 22 trillion in Q4FY24, up from the Rs 21.01 trillion in Q4FY23 and Rs 20.43 trillion in Q3FY24.

“The 4QFY24 corporate earnings have exceeded our expectations, with the BFSI and automobile sectors driving the overall performance. The margin tailwinds in 4QFY24 have ebbed from a high base, necessitating a recovery in revenue growth to boost earnings going forward,” write analysts at Motilal Oswal Securities in their earnings review for Q4FY24.

The combined net profits of 585 BFSI companies in the sample were up 16.7 per cent Y-o-Y to Rs 1.26 trillion in Q4FY24, up from the Rs 1.08 trillion in Q4FY23 and Rs 1.12 trillion in Q3FY24. The BFSI companies accounted for 49.7 per cent of incremental growth in the combined net profits of all listed companies on a Y-o-Y basis in the fourth quarter. However, the BFSI sector also witnessed an earnings slowdown and their profit growth in Q4FY24 was the slowest in the last 15 quarters.

BFSI companies topped the revenue growth chart and their gross interest income was up 20.4 per cent Y-o-Y to Rs 7.64 trillion in Q4FY24 from Rs 6.35 trillion in Q4FY24 and Rs 7.2 trillion in Q3FY24.

Automobile and auto ancillary manufacturers were the top performers in the fourth quarter, driven by gains from lower raw material prices and finance costs.

Their combined net profits were up 80 per cent Y-o-Y to Rs 38,042 crore in Q4FY24, up from the Rs 21,130 crore a year ago and Rs 25,765 crore in Q3FY24.

The sector accounted for 46.5 per cent of incremental growth in all listed companies in Q4FY24 on a Y-o-Y basis.

Earnings growth was led by Tata Motors, Maruti Suzuki, Mahindra & Mahindra, Bajaj Auto, Bosch, Bharat Forge and Samvardhana Motherson International, among others.

In comparison, automobile companies’ combined net sales were up 13.2 per cent Y-o-Y in Q4FY24, growing at the slowest quarter in the last eight quarters.

The companies reported combined net sales of Rs 3.6 trillion in Q4FY24, up from the Rs 3.18 trillion in Q4FY24 and Rs 3.39 trillion in Q3FY24.

In comparison, the combined adjusted net profits of oil and gas companies, including Reliance Industries, were down 9.3 per cent Y-o-Y to Rs 47,132 crore in Q4FY24 from the Rs 51,984 crore in Q4FY23 and Rs 48,347 crore in Q3FY24.

Similarly, FMCG companies’ combined net profits were up 5.6 per cent Y-o-Y in Q4FY24 to Rs 15,178 crore, growing at the slowest pace in the last eight quarters.

The combined net profits of IT services companies such as Tata Consultancy Services, Infosys, Wipro and HCL Technologies were up 10.8 per cent Y-o-Y to Rs 31,935 crore in Q4FY24, their best showing in the last three quarters but the gains largely came from a sharp 64.6 per cent Y-o-Y jump in other income in the quarter.