Infrastructure segment weighs on India Inc numbers

Written by fe Bureau | New Delhi | Updated: Aug 16 2014, 07:07am hrs
InfraThe April-June earnings season for India Inc was more of a mixed bag
The April-June earnings season for India Inc was more of a mixed bag with IT, telecom, FMCG and auto firms largely posting good numbers even as infrastructure firms continued to post muted numbers. Meanwhile, small and mid-sized companies continue to struggle with high debt amid sluggish demand.

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For a sample of 2,316 companies, net profits increased by 35.91% while net sales rose 12.09%. Tata Steel posted a 70% drop in its net to R337 crore due to a write-down of certain investments, while the Aditya Birla Groups Hindalco posted lower-than-expected numbers because of higher finance cost and lower contribution from other income.

However, Tata Motors posted above-estimate numbers on the back of a sterling performance of its overseas arm Jaguar Land Rover, though its domestic business continues to face the slowdown blues. The company launched its much-awaited sedan Zest on which its hopes of a revival of domestic sales depend.

State-owned ONGC got a net realisation of $47.15 per barrel during the quarter for selling crude oil against $40.33 per barrel in the same quarter last year. It forked out R13,200 crore to compensate oil marketing companies during the period against R12,622 crore in the same quarter last year. ONGC said the discount given to oil marketing companies have hit its profit before tax by R11,205 crore, while it brought down the net by R7,396 crore.

BHELs order backlog at the end of the quarter declined by 10% year-on-year and stood at a 21-quarter low of R97,400 crore, while its Ebitda margin declined to an over five-year low of 4.3%, impacted by slowing orders and negative operating leverage. While the pace of execution and margin may start improving in FY16, full recovery in order inflows for BHEL would take longer as the governments focus would be on stabilising stranded power capacities rather than adding new capacities.

Power costs at Hindalco rose 41% on higher ramp-up-related costs at its Mahan and Aditya smelters while its raw material costs went up by 40%, thereby affecting its operating margins, which declined by 60 basis points sequentially.

JP Associates reported a net loss of R80.6 crore, led by lower construction and real estate segment revenues that declined 4.3% and 84% year-on-year, respectively, while interest costs rose 33.8% to R789 crore, highlighting the pain of infrastructure-related companies that have not yet seen a sharp pick-up in demand.

GMR Infrastructure reported a widening of its consolidated net loss to R593 crore with high interest costs for its recently operationalised power plants. Being told to stop charging user development fee at its Hyderabad airport also affected its earnings.

Tata Power missed analysts' expectations by posting a consolidated net loss of R66.73 crore due to lower revenue from coal business, reduced generation from Mumbai operations and lower traded volumes by its power trading subsidiary. However, the company did not account for the compensatory tariff awarded by the Central Electricity Regulatory Commission in February 2014 unlike its peer Adani Power. The company said that its consolidated net profit would have been higher by R225 crore during the quarter had the amount been booked.

With volume growth of 4% on an annual basis along with a favourable sales mix, and e-auction contributing 14% of overall sales, Coal India reported revenues of around R17,800 crore, up 8% on year and11% on a quarterly basis, and Ebitda of R4,300 crore, up 8% year-on-year and 16% sequentially and net profit of R4,033 crore, up 8% on an annual basis and 9% quarter-on-quarter. Higher proportion of e-auction sales allowed blended realisations to move up. According to analysts, the company's performance would depend a lot on the outcome of the decision on capping e-auction sales or not as results for the quarter benefited from improved quantum of e-auction sales (14% against the mandated 10%).