While the shortage of cash in the economy has dampened demand across a host of sectors and will certainly crimp corporate earnings for both Q3 and Q4 of FY17, results for the September quarter weren’t much to cheer about either, reports fe Bureau in Mumbai.
Revenues grew just 3.4% year-on-year (for a sample of 2,681 companies) and it was the subdued rise in costs that helped operating margins expand. Consumer product companies were unable to clock even modest volumes with some reporting a fall. That sales of big ticket discretionary items have been slowing was clear from the 32% y-o-y drop in jewellery volumes for Titan on the back of a 10% y-o-y fall in Q2FY16. Given prices of commodities have been firming up and that demand remains fairly muted, operating margins could be under pressure in the coming quarters.
Indeed, downgrades are expected to continue. Demand remains muted even in the core sector—business was dull at cement manufacturers’ as it was for makers of commercial vehicles–Ashok Leyland’s revenues fell 7% y-o-y on the back of a 10% y-o-y drop in volumes. Order inflows at capital goods firms were reasonably good but the pace of execution remains just about satisfactory.
