Corporate sector results have started trickling in and the first-cut analysis of the early birds companies reveals that the revenue growth momentum has been maintained, so has the operating profit growth, however the net earnings momentum has started to falter.
According to an analysis of 144 companies carried out by FE it is seen that the second quarter net profit has increased by 11.8 % to touch Rs 6,072 crore from the level of Rs 5,430 crore during the same time in the previous year. At the same time revenue for the sample set of companies rose 29.9% to Rs 40,646 crore on a year-on-year basis. For the same period, the operating profit has risen at a faster pace scoring a 31.9% growth to touch Rs 17,154 crore, from Rs 13,009 crore in the previous year.
?This is very much in line with what we had estimated that the topline growth would remain strong and earnings growth rate would ease a bit,? says Suresh Ramanujam an analyst with a Mumbai-based brokerage. ?The impact of lower input costs and higher interest cost seems to be reflecting in these numbers, however, it is too early to make a statement on the others,? he added.
Now, the cause for concern, Ramanujam adds, is that the first-cut numbers have a huge domination from select players like Axis Bank and HDFC Bank, which have indeed seen robust performances.
Axis Bank?s saw a strong performance being dished out. While main income increased 51.81% to Rs 2,545 crore, the net profit increased 76.9% to Rs 403 crore during July-September 2008. Similarly, another private sector bank, HDFC Bank registered a sharp 68.9% increase in its income, taking it to Rs 3,991 crore and a 43.3 % rise in net profit to Rs 528 crore.
If these are removed from the sample, the earnings growth numbers might not look so attractive, says Ramanujam. If this is the case, the overall earnings might end up being disappointing. And the weeks ahead will reveal the mystery as a large number of bigwig results are lined up in the days ahead.