Corporate sector growth in profits, sales moderates in March quarter

Net sales of these companies grew at 9.3 per cent in the January-March quarter compared to a growth of 11.6 per cent in the same quarter of the previous fiscal. In absolute terms, net sales stood at Rs 11.68 lakh crore in March 2024, as against Rs 10.68 lakh crore in the year-ago period.

Corporate Results for Q4 FY24 (378 companies)

Source: Bank of Baroda

“Preliminary results of a sample of 378 companies show a slowdown in both sales and net profits growth in Q4 FY24. A clearer picture will emerge only after we have a sizeable sample of companies,” said Madan Sabnavis, Chief Economist, Bank of Baroda.

Excluding the banking, financial services and insurance (BFSI) sector, the net sales growth of 296 companies remains downbeat at 5.6 per cent in the March 2024 quarter versus 8 per cent growth in Q4 FY2023, showed the Bank of Baroda’s analysis.

The net profit of these 296 companies degrew by 15.7 per cent in the March 2024 quarter from a growth of 10.8 per cent in the year-ago period. Profitability has taken a huge hit as global commodity prices more or less stabilized in the period, Sabnavis said.

According to HDFC Securities’ Head of Retail Research, Deepak Jasani, an analysis of 465 companies’ quarterly results shows that while the PAT of these companies has risen by 12 per cent, sales have grown by 11.5 per cent on a year-on-year basis.

“Topline growth (of 465 companies) has been slightly better than expected mainly because of the impact of inflation in goods, services and interest rates. There is pressure on the bottom-line due to margins contracting a bit. Profit growth has been not as robust as it used to be in the previous quarters,” Jasani said.

Reliance Industries Ltd (RIL), the market leader, reported a flat growth in consolidated net profit at Rs 21,243 crore for the quarter ended March 2024 as against Rs 21,227 crore in the same period of last year, showing a marginal growth of 0.1 per cent.

In the March quarter, FMCG (fast-moving consumer goods) major Hindustan Unilever Ltd (HUL) posted a 5.72 per cent decline in net profit at Rs 2,406 crore as against Rs 2,552 crore in the same period of last year. Revenue for the quarter was Rs 15,077 crore as against Rs 15,053 crore a year ago.

Axis Securities Head (Fundamental and Quantitative Research) Neeraj Chadawar said the Q4 results of some set FMCG companies indicates recovery in demand in the rural sector.

“The commentaries coming from the FMCG sector are showcasing some green shoots in the rural recovery. We still need to notice a concrete trend in the upcoming quarters, but there is some rural recovery underway which companies are highlighting,” he said.

If the monsoon and Union Budget, scheduled to be announced in the first week of July, are as per the expectations of the market, FMCG companies could see an uptick in volume in the second half of FY2025, Chadawar said.

During the quarter, IT companies also posted moderate results amid a slowdown in demand globally.

IT major Tata Consultancy Services (TCS), India’s largest software firm, reported a consolidated net profit of Rs 12,434 crore for the fourth quarter ended March 2024, showing a 9 per cent increase from Rs 11,392 crore recorded a year earlier.

Revenue from operations registered a year-on-year (YoY) increase of 3.5 per cent to reach Rs 61,237 crore from Rs 59,162 crore.

Infosys Ltd has reported a 30 per cent rise in net profit at Rs 7,969 crore for the quarter ended March 2024 (Q4) as against Rs 6,128 crore in the same period of last year even as its operating margin declined marginally. It posted revenues of Rs 37,923 crore, showing a growth of 1.3 per cent from Rs 37,441 crore a year ago.

“The Indian IT sector was predicted to experience sluggish growth in Q4, and most of the actual results fell below expectations, primarily due to difficulties encountered by the BFSI and retail around the globe,” said Vinod Nair, Head of Research, Geojit Financial Services.

However, there was an improvement in margins attributed to cost-saving measures initiated by companies during slum demand. Depreciation in the rupee did help boost margin, he said.

According to Nair, although the overall (Q4) results performance slightly exceeds expectations, there is a consensus emerging that the earnings growth expected for FY2025 is likely to be slower compared to FY2024.

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