Earnings show few signs of revival in investments

However, corporate India continues to battle stagnating demand in several segments and players in the consumer space seem to have little pricing power.

Moreover, the capex cycle, critical for the economy to get back on track, may not have quite bottomed out with ongoing projects also seeing slow execution.

Engineering firm Larsen & Toubro’s net profit for the three months to December would have been far smaller had it not been for the support from other income.

Also, commercial vehicles manufacturer Ashok Leyland reported a loss of R84 crore with operating margins crashing 300 basis points year-on-year. Hindustan Unilever disappointed the Street as volumes grew just 5% y-o-y.

For a clutch of 247 companies (excluding banks and financials), revenues in the December quarter grew just 15.3% y-o-y compared with around 17%-plus in the previous three quarters, a sign that demand is not too strong.

However, companies have benefited from benign commodity prices and have managed to keep costs on a leash, earning themselves better operating margins — up 180 basis points y-o-y — and operating profits that jumped 30% y-o-y. The bottom line was driven up 43.5% y-o-y thanks to moderate increases in depreciation and taxes and support from other income — up 19% y-o-y.

Consumers are clearly paring discretionary spends but what’s of more concern is that key segments like commercial vehicles and cement remain

... contd.