Results from the country’s corporate sector for FY16 aren’t much to cheer about but the Q4FY16 numbers show a recovery of sorts, reports Fe Bureau in New Delhi. While India Inc reported a drop in sales for FY16, there was a definite uptick in the three months to March at nearly 3% year-on-year. Consequently, net profits for Q4FY16 rose a sharp 19%, compared to just 10.5% in the full year. Interestingly the sum of operating profits and wages — a proxy for gross value added — has risen 7% in FY16 and by nearly 7% in Q4FY16.
Most heavyweights, including Bharti Airtel, Larsen & Toubro and Tata Motors, have surprised the street in the March quarter beating estimates handsomely. Benign prices of commodities and some traction in volumes have helped companies gain operating leverage. Cement players, in particular have reported good volumes, as have FMCG firms. Engineering companies have executed well and consequently reported better operating margins although order books remain lean.
With the Met forecasting a good monsoon, the momentum in earnings growth is expected to sustain in the quarters ahead, driven by higher consumption spends. The capex cycle, however, could take time to turn with the private sector in no hurry to add capacity. A full-blown recovery, therefore, is still some time away but we may have seen the last of earnings downgrades.