High interest cost, fall in domestic demand and fall in exports have led to a contraction in the corporate profitability of the 110 companies in the list of BSE 500 companies that declasred their results till Friday, January 23.
While margins contracted and profits dipped by 10 per cent over the same quarter previous year, revenues witnessed a growth of 18 per cent, indicating the bad state of the economy and bleeding corporate profitability. The aggregate profits of the 110 companies in the list came down from Rs 18,017 crore to Rs 16,377 crore.
“I expect the pressure on profits to not only in this quarter but also in the next quarter,” said Pankaj Pandey, head of research, ICICIdirect.
Except for banks that managed to show good revenue and profit growth because of high treasury income, companies from across sectors and sizes remained under pressure.
“Banks have benefited from the fall in bond yields that have come down by 400 basis points, leading to a gain in their treasury incomes,” said Pandey. “However, they are witnessing pressure from non performing assets.”
The sectors that faced the maximum pressure were automobiles and auto ancillaries, financial services and firms in the oil refinery business.
The big losers were Ranbaxy (net loss: Rs 680 crore), Mangalore Refinery (net loss: Rs 285 crore) and Jet Airways (net loss: Rs 214 crore).
Bharti Airtel went undeterred even during the weakest quarter seen in several years and the company registered a gain in profits by over 40 per cent.