BOMBAY, 17 November 2003 — Here we go again. It is that time of the year when we review the progress made by Corporate India in the last few months and then try and look ahead at the months to come.
Well, going by all the results that have come in till now, one can safely conclude that in the first half of the current fiscal, 70 percent of the companies have surpassed their net profit expectations for 2002-03. According to a survey, of the 1,317 companies which have declared their first-half results so far, 216 companies have bettered their last year’s performance in the first two quarters of the current financial year.
In the aggregate, the net profit of the 216 companies increased to Rs.19.26 billion in the first-half of 2003-04 from Rs.13,98 billion in 2002-03. While sales of the corporate sector as a whole increased 12 percent and net profit grew 29 percent in the first half (over the corresponding period of the previous year), these 216 companies posted a 38 percent rise in sales and a 175 percent rise in net profit.
Companies like Tata Motors, Maruti Udyog, Automobile Corporation of India, Bongaigaon Refinery, Hindustan Zinc and Eveready Industries were among the best performers.
IT companies also continued to remain top performers.
The automobiles sector has undoubtedly had a brilliant first half. There has been an overall growth in sales and net profits in major auto companies like Tata Motors and Mahindra & Mahindra. The two-wheeler segment had a mixed bag of performances. Tata Motors for the quarter ended Sept. 30, 2003, posted a net profit of Rs.2.07 billion for the quarter ended Sept. 30, 2003 as compared to Rs.588 million for the quarter ended Sept. 30, 2002. Mahindra & Mahindra reported a 25 percent rise in quarterly net profit, well above expectations. And in two wheelers, Bajaj Auto for Q2 recorded a growth of 54 percent in net profit.
Along with the auto sector it has been an excellent half for the steel companies as well.
India’s largest private sector steel company, Tata Steel reported a 100.8 percent growth in net profit, as demand from the booming construction and automobile sectors swelled. This was immediately followed up after India’s largest steel company in the public sector, SAIL posted a net profit of Rs.5.05 billion for the quarter ended Sept. 30, 2003 as compared to net loss of Rs.1.58 billion in the previous corresponding period. And in the metal sector, Hindalco recorded a 17.7 percent rise in net profit for Q2.
The cement sector has also shown its strength in this first half. ACC reported strong Q2 results and the management even gave an optimistic future outlook. Its net profit recorded a huge jump of 444 percent and income was up by 12.4 percent.
Grasim Industries notched up a 58 percent rise in net profit for Q2 due to better realization in its VSF and sponge iron business. On the other hand, Gujarat Ambuja failed to meet analysts’ expectations though it reported a 40 percent rise in net profit for Q1 ended Sept. 30, 2003.
All these figures indicate that the Old Economy stocks which were not doing too well last fiscal, have now bounced back with a vigor. If it was the IT companies which had all the thunder last fiscal, it looks like this fiscal, the Old Economy companies are also thundering.
In the banking sector, defying all stories of a scam or a close down or rumors of selling its stake out, ICICI Bank proved its mettle after recording a 40.7 percent jump in net profit for Q2. As against this, State Bank of India (SBI) posted lower then expected results. For Q2 September 2003, SBI reported a 21 percent growth in net profit at Rs.9.89 billion on a 14.5 percent increase in total income at Rs.102.69 billion. HDFC for Q2 posted a net profit of Rs.2.03 billion on total income of Rs.7.76 billion. But over all the performance of the banking sector has been good. The cut in the interest rates announced by the RBI in the April Credit Policy enabled banks to sustain treasury profits and improve net interest margins.
The fast moving consumer goods (FMCG) sector has notched up a fair performance. FMCG companies primarily depend on rural India for their market and there the farmers will spend only if the monsoon has been good. Hindustan Lever reported a 7.24 percent rise in Q3 net profit. Nestle has been doing well, its net profit rose by 72 percent.
The telecom industry saw a complete shakeout, as expected.
The worst hit was VSNL, it posted a net profit of Rs.487 million for Q2, down 80 percent. MTNL’s performance was marginally better. Bharti Tele-Ventures reported robust growth, it posted a net profit of Rs.1.24 billion in the first half of the current financial year as against Rs.1.97 billion loss in April-September 2002.
Overall, the first half of the current fiscal has been good for corporate India. And for the coming months, things are only expected to get better as the entire economy as a whole is currently on a sound footing.
