Private corporate sector sales up 6.9%; net profits rise 14.2% in April-June: RBI data

Net profits of listed non-government non-financial companies rose 14.2 per cent, compared to 9 per cent in the year-ago period, and 6.4 per cent in Q4 FY24, the data on performance of the private corporate business sector for Q1 FY25 showed. The analysis is based on the quarterly financial results of 2,934 listed non-government non-financial companies.

All major sectors, manufacturing (67.5 per cent share in total sales), information technology (IT) (10.1 per cent), non-IT services (12.8 per cent), construction (5.3 per cent) electricity (2.9 per cent) and mining (1.1 per cent) recorded higher sales when compared to the corresponding quarter of last year.

Within the manufacturing sector, sales of cement, iron and steel, fertilisers, paper products and glass products declined, the data showed.

In FY24, annual sales growth rate of listed private non-financial companies slowed to 4.7 per cent from 19.8 per cent in FY23. On expenditure front, manufacturing companies’ expenses on raw material increased by 6.4 per cent (y-o-y) in consonance with their sales growth, whereas their staff cost recorded higher increase of 10.7 per cent during Q1 FY25; staff cost of IT and non-IT services companies increased by 2.4 per cent and 12.8 per cent, respectively.

Staff cost to sales ratio for manufacturing, IT and non-IT services companies stood at 5.8 per cent, 49.1 per cent, and 11 per cent, respectively, during Q1 FY25. Operating profit of the private corporate business sector rose by 9.6 per cent in Q1 FY25, as against 5.3 per cent in the same quarter of the previous fiscal.

Operating profits of manufacturing, IT and non-IT services companies rose by 9.3 per cent, 5.1 per cent and 6per cent, respectively, during Q1:2024-25 and their operating profit margin stood at 14.6 per cent, 22.5 per cent and 21.4 per cent, respectively.

The interest coverage ratio (ICR) of manufacturing and non-IT companies improved marginally to 7.9 and 1.8 per cent, respectively, during the latest quarter. The ICR for IT companies remains elevated at 42.9 per cent. ICR, which is a ratio of earnings before interest and tax to interest expenses, is a measure of debt servicing capacity of a company. The minimum value for a viable ICR is 1.