Corporate Indian Sector Performs well in the second quarter of 2022

Based on the 386 companies that have already released their results, Corporate India’s performance in the September quarter has been strong. The same as in prior quarters, increasing raw material costs is still a hindrance. However, the increase in commodity prices brought in high input costs, which had an effect on businesses’ profitability.

“Quarterly financial performance shows that net sales continue to grow at a robust double-digit pace of 22.9% in Q2FY23 against 22.3% in Q2FY22,” said economist Dipanwita Mazumdar from Bank of Baroda.

While several companies in the category reported moderate growth in the most recent quarter, analysts think banks outperformed them with stronger earnings.

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credit: businessinsider

“There seems to be divergence on the profitability frontier. Higher input costs have impinged on the PAT numbers which showed moderation in growth to 8.5% in Q2FY23 from 21.1% in Q1FY22 and pre-pandemic growth of 27.9% (supported by softer input prices at that time),” said Mazumdar.

“Sector-wise, banks seemed to have performed better. Banks’ showed a double digit growth of PAT by 41.6% in Q2FY23 against 35.3% in Q2FY22, supported by higher interest income in the rising rate cycle,” said Mazumdar.

Axis Bank reported a 31% increase to 10,360 crore over the time, while HDFC Bank reported an 18.9% increase to 21,021 crore. Recently, ICICI Bank reported a 26.5% YoY increase in its NII to 14,787 crore. According to her, FMCG firms’ net sales increased by 19.3% in the second quarter of 2013 compared to 12.1% in the same quarter of 2012.

Even though the majority of FMCG companies reported excellent profitability for the September quarter, they are nevertheless concerned about an inflationary climate.

HUL has stated that it is “cautiously bullish in the near-term” and that it is “cautiously optimistic” about how inflation would affect the demand environment in its September quarter earnings.

For auto companies, Mazumdar believes, “While net sales have shown some moderation, it still maintained a double digit growth rate of 20.3% compared to 32.8% in Q2FY22.”

However, she emphasised that the consumer durables industry, which experienced an increase in net sales of just 0.7% for Q2FY23 compared to 35% in the same time last year, was not helped by the holiday happiness.

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