The big boys of India Inc have put up a relatively poor show in Q2FY25 so far compared with smaller companies, with their net sales for the September quarter rising just 3% year-on-year.
This has dragged down the aggregate sales growth for a sample of 1,237 companies (excluding banks and financials and oil marketing companies) to just 5% y-o-y — the slowest in at least four quarters.
Thanks to their anaemic topline growth, the operating profit for the bigger companies grew by just 6% y-o-y. If they have managed to show some improvement in their bottomlines, it is thanks to a smaller increase in costs and also a big boost from other income. Moreover, some businesses have swung to a profit from a loss in the corresponding quarter –– Q2FY24.
On the other hand, businesses with a turnover of less than Rs 10,000 crore have posted a very decent 10% y-o-y growth in net sales, the highest in at least four quarters.
Some companies, however, have done well. At Dr Reddy’s Laboratories, sales were up 16.5% y-o-y, while engineering giant Larsen & Toubro put up a strong show posting a revenue growth of 21% y-o-y. Others like Mahindra & Mahindra, too, did well to post a standalone net revenue growth of 13% y-o-y, albeit driven mainly by price increases rather than volumes.
On the other hand, consolidated sales at Tata Steel have fallen by 3.2% y-o-y, while at Dalmia Bharat, they fell 2.1% y-o-y and at Tata Chemicals by 0.8% y-o-y. Revenues at Ashok Leyland were down 9% y-o-y, thanks to a big dip in volumes. Again, Hindustan Unilever revenues grew by just 3% y-o-y, while Dabur India’s revenues were down 5% y-o-y. At Tata Power, they were down 1% y-o-y.
Consumer companies have found it hard to grow their toplines at a time when urban demand has been slowing and rural demand is yet to fully recover.
The operating profit growth for the sample of 1,237 companies, of 6% y-o-y is the slowest in at least four quarters. They had expanded by 14%, 11% and 22% in the June, March and December quarters, respectively.
An analysis by Kotak Institutional Equities (KIE) identified more than 50 top-rung companies whose earnings before interest, tax, depreciation and amortisation (ebitda) in Q2FY25 grew by less than the “modest expectations”. These include Bajaj Auto, UltraTech Cement, Godrej Consumer Products, Polycab, Pidilite, Interglobe Aviation, ITC Metro Brands, Avenue Supermarts, and Godrej Properties.
From: financialexpress
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