InvestorQ : How were the quarterly numbers for the Sep-20 quarter compared to the previous quarters in terms of top line and profits?
ishika Banerjee made post

How were the quarterly numbers for the Sep-20 quarter compared to the previous quarters in terms of top line and profits?

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3 months ago
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Even as the overall Indian economy was still recovering from the effects of COVID-19, the corporate performance was one of the best shows put up by Indian companies. This is based on a CRISIL study of 800 top Indian companies spread across a cross section of industrial groupings and accounting for a significant 85-88% of the total market cap of NSE.

According to the study presented and summarized by CRISIL, corporate net profits rose 15% in Sep-20 quarter to touch an all-time high level in the history of corporate India. Overall EBITDA or the earnings before interest, depreciation and amortization was at Rs.160,000 crore in Sep-20 quarter compared to just Rs.102,000 crore in the Jun-20 quarter.

What was the big trigger for this performance? In fact, this was largely driven by widening operating margins on the back of softer input costs and better levels of capacity utilization. Low capacity utilization had been the bane of Indian corporates for some time now. The higher capacity utilization is also an indication of better demand traction across sectors.

The good news was that the operating margins or OPM gained 100 bps during the quarter on a yoy basis. However, what could be disheartening for economists was that employee costs were down 400 bps. Clearly, all the profit growth is not translating into larger employee benefits, which means limited traction in terms of retail demand.

There is also a story of big getting bigger and small getting smaller. The “feel good” factor was more prominent among large companies than smaller ones. Growth was prominent in consumption and commodity linked sectors while textile exporters faced deep pain. That would mean that the SME and MSME sector strains still continue to be elevated.

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