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”.
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