India Inc sees steady growth in Q3 earnings results

India’s corporate performance continues to sustain and maintain the growth momentum in the third quarter, previous year.

January 24, 2022

As per a survey conducted, 254 companies have already announced their earnings growth.

The analysis shows that the revenue has increased 28.4% for the companies that are currently under-review, while the net profile has increased by 17%.

12% the top line growth had an advantage of a low base a year ago.

Infosys and Tata Consultancy Services (TCS) have collectively contributed 52.1% to the topline and 58.1% to the net profit of the sample.

India’s corporate performance continues to sustain and maintain the growth momentum in the third quarter, with net profit and revenue growing in double digits and continuing to be on an upward trajectory,  as compared to a year earlier. As per a survey conducted, 254 companies have already announced their earnings growth. The analysis shows that the revenue has increased 28.4% for the companies that are currently under-review, while the net profile has increased by 17%. 

A year ago, while the revenue had shrunk by 12% the top line growth had an advantage of a low base. Considering the profit growth last year, the net profit had increased 142%. The operating margins of these companies have come down to 250 basis points year-on-year to 21.6%. Ideally, one basis point is 0.01%. 

To protect profitability amid weak topline growth, India Inc was optimising costs in the last quarter of the previous year and hence the margin has performed as expected. Since then, input costs have increased due to higher commodity prices. As per the revenue, the raw material costs for these companies have increased to 24.3% in the last quarter of the previous year from 19.9% during the corresponding period. 

Reliance Industries (RIL) had initially set the trend, by being the country’s largest company as per the market capital and the revenue, along with other leading Tech companies like Infosys and Tata Consultancy Services (TCS) have collectively contributed 52.1% to the topline and 58.1% to the net profit of the sample. When excluded, the revenue and the net profit comes down to 18% and 13.4% respectively. 

According to reports, the overall trend is expected to alter with other sectors bringing in their share of earnings in the upcoming weeks. The automobiles, cement, FMCG, hospitality, metals and mining sectors are expected to see a downfall and can affect the aggregate performance.