ETIG analysed a common sample of 254 companies that have already announced their earnings. The analysis showed that revenue climbed 28.4% for the companies under review, while net profit grew 17%.
Earnings so far in the third quarter reflect a sustained growth momentum in corporate India's performance, with both revenue and net profit continuing to expand in double digits in comparison with the year-ago period.
ETIG analysed a common sample of 254 companies that have already announced their earnings. The analysis showed that revenue climbed 28.4% for the companies under review, while net profit grew 17%.
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To be sure, topline growth had an advantage of a low base in the year-ago quarter when revenue had shrunk 1.2%. By contrast, net profit growth masks the fact that profit had more than doubled - or expanded 142% - last year.
Margin Performance on Expected Lines Operating margins of these companies narrowed 250 basis points year-on-year to 21.6%.
One basis point is 0.01%.
The margin performance is on expected lines since India Inc was in a cost-optimisation mode in the year-ago quarter to protect profitability amid weak topline growth. Furthermore, input costs have since risen due to higher commodity prices.
Raw material costs of this set of companies, relative to revenue, increased to 24.3% in the December 2021 quarter from 19.9% in the year-ago quarter.
On a sequential basis, growth momentum was intact with the sample's revenue and net profit growing 8.5% and 16.2%, respectively.
Earlier, analysts had anticipated strong aggregate growth, with performance driven by a select few sectors. "The breadth of earnings remains weak with 42% of companies in our universe likely to post a year-on-year decline in earnings, while 38% are expected to post higher than 15% earnings growth," Motilal Oswal Financial Services had said in an earnings preview report.
The initial trend was driven by Reliance Industries (RIL), the country's largest company by revenue and market cap, and technology bellwethers such as Infosys and Tata Consultancy Services. Together, they contributed 52.1% to the topline and 58.1% to the net profit of the sample. Excluding them, revenue and profit growth moderated to 18% and 13.4%, respectively.
With more earnings from a range of sectors expected in the coming weeks, the overall trend could change. Expected weakness in sectors such as automobiles, cement, FMCG, hospitality, metals and mining may cause aggregate performance to be more circumspect.
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