India Inc's Q3 nos point to strong rebound

ET Intelligence Group: Corporate India appears to have been resurgent in the third quarter, pointing toward a healthy turnaround in the broader economy after being laid low by the pandemic. Aggregate results for the October-December period so far show a strong rebound in revenue, profit and operating margin after excluding Reliance Industries (RIL), which reported lower revenue year-on-year. Revenue of the sample of 238 companies rose 10.4% in the period, the highest year-on-year growth in six quarters. Net profit shot up by 151%, the biggest jump in at least nine quarters on the back of a 35% drop in the year-ago quarter. Operating profit also increased at a nine-quarter high of 33.3%. The performance reflects the rebound in overall demand amid festivals during the quarter and a lower year-ago base.80441384The operating margin improved by 461 basis points year-on-year to 26.9%, which was at a multiquarter high. RIL reported a 21% year-on-year drop in the revenue from operations at Rs 1.24 lakh crore in the December quarter while net profit grew 25.8% to Rs 14,894 crore. After including its performance in the sample, the aggregate revenue growth was flat year-on-year while net profit growth was 104.9%. It contributed 24% to the sample’s revenue and 18.4% to net profit. The improved performance by the 24 IT sector companies, which together reported 6.3% revenue growth and 17.2% net profit growth, helped the overall sample’s performance, given their significant contribution of 23.4% to aggregate revenue and 31.8% to net profit.The overall performance of India Inc is expected to be stellar for the third quarter following a gradual economic recovery after a nationwide lockdown in the first quarter of the fiscal year to curtail the pandemic. "The earnings momentum is likely to sustain in Q3FY21 with our coverage universe estimated to post 26% profit growth - highest in many quarters,” said Edelweiss Securities in an earnings preview report. It expects the recovery to be led by market share gains from the unorganised sector, marginally higher gross margins year-on-year and continued cost rationalisation.

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