Even as revenue growth continued to remain elusive for India Inc for the quarter ended September 2015, the aggregate net profits for the group of companies that announced their results till Friday, jumped 12 per cent on account of the sharp decline in their input cost.
A look into the results of 66 companies (excluding banks and financial services firms) that are part of BSE 500 shows that the aggregate revenue for the group of companies declined 13.8 per cent for the quarter ended September 2015 to Rs 2,01,158 crore, down from Rs 2,33,458 crore in the same quarter last year as the economy continued to witness a drag on consumption and investment led growth.
However, benefitting from reigning low global commodity prices by way of sharp decline in their raw material expenditure, the aggregate of standalone net profit for the companies rose 11.9 per cent from Rs 29,972 crore in the same quarter last year to Rs 33,527 crore in the quarter ended September 2015.
The raw material expenditure for the companies fell sharply by 36.8 per cent from Rs 125,267 crore in September 2014 to Rs 79,133 crore resulting into savings and net profit for the companies.
Reserve Bank of India’s decision to cut repo rate (the rate at which RBI lends to commercial banks) by 75 basis point between January and June 2015 also benefited the firms as they saw a 3 per cent decline in aggregate interest expenditure.
A strong result announcement by Reliance Industries, Infosys and TCS also helped the cause. While low crude oil prices benefitted RIL that witnessed a sharp rise in its gross refining margin during the quarter, Infosys and TCS gained from a weakening rupee against the dollar. RIL announced a 14 per cent rise in its year-on-year net profit despite a 37 per cent decline in its net sales for the quarter.
While the large cap companies led the revenue growth decline, they benefited significantly from a softening commodity prices led primarily by RIL. While the net sale for large cap companies (with market cap of over Rs 20,000 crore) fell 14.7 per cent during the quarter, their raw material expenditure declined by over 40 per cent, resulting into profits.
The medium and small cap companies (with market capitalisation of less than Rs 20,000 crore) on the other hand saw their revenue decline by 8 per cent and benefited both from softening input cost and decline in their interest expenditure. Their aggregate interest expenditure fell by 5 per cent.
The results for the quarter follow a weak performance by India Inc in the year ended March 2015 and in the first quarter ended June 2015. Even in the quarter ended June 2015, the companies posted net profit despite a decline in revenue growth only on account of softening crude oil and other commodity prices.
Aggregate revenue falls 13.8% (in Rs):