India Inc's 'strong' results in the October-December quarter actually tell only half the story. True, demand has picked up in the economy but last year's poor showing is equally responsible for the stellar figures.
The low 'base effect' - growth in a quarter is computed relative to figures for the same period in the previous year - has ensured that the year-on-year growth numbers look good.
In fact, revenues and profits of the 145 companies in the list of BSE 500 that had announced their results by Friday grew 23 per cent and 45 per cent respectively over last year's third quarter.
However, when compared with figures for the July-September quarter, the results tell a different story. Aggregate revenues for the 145 companies have risen by just 7.5 per cent and profits are down 1 per cent.
"Last year, in the same period, the commodity prices were high, interest rates were on a rise and there was an overall fall in demand, but this time around there has been a reversal in all three along with a base effect that has resulted in good numbers," said Aseem Dhru, chief executive officer, HDFC Securities.
Amongst the big players, Larsen & Toubro, ICICI Bank and Infosys Technologies came out with weak results while Reliance Industries, ONGC, Hindustan Zinc and Bajaj Auto came out with strong numbers.
Reliance Industries, which has a high weightage in the Sensex, saw its revenues and profits grow by 92 per cent and 16 per cent respectively.
Companies in the pharmaceutical, sugar and petroleum industries came out with strong numbers. IT, banking and telecom sectors, though, showed weak revenue growth but healthy profit growth.
While 25 companies in the list of 145 registered losses in the third quarter of 2008-09, only nine reported losses this time.
Experts said strong results were unlikely in the fourth quarter, as costs were rising. “I do not see similar results in the next quarter as commodity prices are on a rise,” said Alex Mathews, head of research, Geojit BNP Paribas Financial Services.