Earnings show few signs of revival in investments
weak; net sales at Ashok Leyland fell 18% y-o-y as both volumes and realisations were hit while sales volumes at Ultratech Cement stayed flat.
Moreover, demand for industrial goods isn’t picking up meaningfully — L&T’s muted 10% y-o-y revenue growth suggests a loss in momentum given that the company’s revenues had risen 21% y-o-y in the first half of the year. Consolidated revenues at chemicals producer Rallis rose just 5% y-o-y with the core business not faring well. The jump in profits has come from softening input prices — as a share of sales, the cost of raw materials for the sample has risen just 92 basis points y-o-y, a much smaller increase compared with that in previous quarters. Lower fuel prices, for example, have driven up profits at Ultratech while Asian Paints gained by paying less for key inputs.
Critical areas like mining continue to be in trouble; the ban on mining operations in Goa and Karnataka, for instance, hit Sesa Goa’s bottom line with the miner posting a loss of R170 crore.
So far the results show few signs that corporate India is getting back into investment mode; while L&T’s order book grew 14% y-o-y in the December quarter, analysts point out that about 22% of the inflows during the quarter was from overseas markets. Moreover, they add that execution of projects remains tardy.
While the IT companies have done well to combat the slowdown in the global market — both Infosys and TCS reported good numbers and strong deal
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