Early birds herald result season with good tidings
two quarters before that.
RIL’s presence in the sample does tend to distort the picture — it posted a 24% y-o-y rise in net profit to R5,502 crore on the back of strong refining margins and a rebound in margins for the petrochemicals business. ITC’s profits rose 21% with tobacco revenues robust and non-tobacco FMCG revenues up 30% y-o-y.
However, it’s early days yet and industry continues to tread cautiously. Bajaj Auto MD Rajiv Bajaj, for example, believes the road ahead could be bumpy for a bit. Operating margins in manufacturing continue to be under pressure. At Exide, for instance, they crashed 170 basis point y-o-y while Hero Moto’s gross margins were dented by 104 basis points and at Hindustan Zinc they fell 190 basis points. The software set remains optimistic; TCS MD & CEO N Chandrasekaran says the environment remains good and deal flow strong.
Nevertheless, what’s remarkable about the quality of the bottom line this time around is that there’s virtually no contribution from other income. Other income was higher by just 6% y-o-y whereas it rose more than 35% y-o-y in each of the three preceding quarters. Surprisingly, tax outflows are up just 10% y-o-y against the 13% y-o-y increase in the September quarter.
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