The second quarter of financial year 2005-06 has not brought much cheer to corporate board rooms and Dalal Street. Stock market bulls and investors who were eagerly waiting for the financial results were a bit disappointed with the numbers coming out from top companies.An analysis of the Q2 results of 1,046 companies has revealed that the net profit has remained flat with a fall of 0.99 per cent from Rs 63,503 crore in the same quarter of last year to Rs 63,135 crore. The turnover of these companies also remained lacklustre at 6.03 per cent (up from Rs 274,561 crore to Rs 291,129 crore) for the quarter.The major reason for the lacklustre performance of India Inc is the fall in profits posted by some of the leading companies like SBI, Indian Oil, ACC, Tata Motors and Ranbaxy. Oil majors BPCL and HPCL came out with huge losses for the quarter as the government delayed the hike in fuel prices.‘‘It’s a mixed performance by corporates in the second quarter. Results of pharma companies were not up to expectations. Similarly, banking and steel companies also came out with mixed results,’’ said Ambareesh Baliga, vice-president of Karvy Stock-broking.Analysts feel that the lower-than-expected performance of some of the companies will be reflected on the stock markets in the coming days. The price-earning (PE) ratios of many companies have shot up following the dip in profits.Share prices had come down by over 1,000 points in the last one month. Apart from FII selling and weakness in global emerging markets, a major reason for the fall is the mixed results posted by corporates. The benchmark Sensex has surged by over 1,000 points in August and September.Finance Minister P Chidambaram had justified the bull run in September saying that the price-earning (PE) ratio of the market (then around 17.50-18) was in the comfort zone. The PE ratio has now come down to 15.45 with the market factoring in the big fall in the bottomline.SBI, the largest commercial bank in the country, registered a marginal 12.34 per cent rise in net profit. Tata Motors which posted only a 9.26 per cent increase in net profit for Q2, said margins would continue to be under pressure due to high steel and fuel prices. The market is looking ahead for Q3 with optimism. But analysts and fund managers are getting worried over the possibility of a rise in interest rates.
