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Losing steam

Second wave could derail strong corporate recovery

Topics
Indian companies | Indian Economy | Economic recovery

Business Standard Editorial Comment  |  New Delhi 



Town hall circle wears a deserted look during the weekend curfew amid surge in coronavirus cases, in Bengaluru (Photo: PTI)
Town hall circle wears a deserted look during the weekend curfew amid surge in coronavirus cases, in Bengaluru (Photo: PTI)

The Q4 (January-March) 2020-21 results of a sample of 433 listed companies suggest that corporate recovery has gathered steam. Although higher sales revenues and strong growth in profits have been reported, an analysis of the results must start with multiple caveats. In late March 2020, economic activity was truncated by the lockdown, leading to a lower base. The first quarter of 2020-21 was also hit by lockdown, so the base effect will be more pronounced. On the other hand, while Q4 2020-21 saw some restoration of normalcy, the second wave will severely impact economic activity in the ongoing financial year. Extrapolations from these results are, therefore, liable to error. That said, the sample shows impressive sales growth of 18.5 per cent to Rs 10.87 trillion, an increase of 37.4 per cent in EBITDA (earnings before interest, tax, depreciation, and amortisation), or operating profits, to Rs 3.06 trillion, and 112.9 per cent growth in profits after tax (PAT) to Rs 1.24 trillion. Interest costs have fallen by 11.5 per cent, while taxes paid have risen by 33.8 per cent.

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First Published: Sun, May 16 2021. 22:49 IST

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