Warning signals

Disappointing start to Q3 corporate results

Business Standard Editorial Comment | New Delhi
Last Updated at January 24, 2017 22:45 IST

Up till now, there was little clarity about the impact of the government’s demonetisation move. But initial corporate results for the third quarter point to a clear negative impact. The key culprit, as many had expected, was lacklustre demand, which made corporates struggle for profits. It is not a minor blip either: A sample of 160 companies indicates that profits have grown at the slowest rate in the past 10 quarters. Although this is a small sample, yet it contains leaders across several sectors, including seven Nifty companies. Of course, some sectors are under-represented and a fuller picture will emerge as other results are reported. For instance, even though sales of automobiles have been dismal, company financials are not available just yet. Similarly, cement and construction companies have also not declared their results yet. But it is unlikely that the broader picture is too dissimilar from what this sample suggests.

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