revenue rises

September earnings: Revenue rises but turnaround not yet in sight

Results have been better than expected, but analysts say it may take 2-3 quarters to build confidence 

The fall in the value of the rupee translated into higher realizations for export-driven sectors such as information technology and pharmaceutical companies. Photo: Pradeep Gaur/ Mint

Mumbai: Fiscal second-quarter revenues of 40 firms on the Nifty index grew at the fastest pace in a year but profits saw a muted rise because operating costs and a volatile rupee played spoilsport.

The 40 companies saw net sales rising by 12.5%, the fastest in four quarters, while net profit rose 2.2%, after declining in the two preceding quarters.

For 27 Sensex companies for whom comparable data was available for 25 quarters, profits grew at 6.9% in the September quarter, while net sales rose 13.8%, both at their quickest pace in seven quarters.

All 50 constituents of the Nifty index on the National Stock Exchange have announced their earnings but Mint’s analysis is based on financial results of 40 of them, excluding energy firms and those for whom comparable data was not available for the past 25 quarters. All firms that constitute the Sensex, BSE’s 30-stock benchmark equity index, are also part of Nifty.

State-owned energy firms such as Oil and Natural Gas Corp. Ltd, GAIL (India) Ltd, and Bharat Petroleum Corp. Ltd are not included as they share a subsidy burden on account of the revenue loss for government-owned oil marketing firms from selling fuel below cost. For the sake of uniformity, Reliance Industries Ltd was also excluded.

All earnings are taken on a standalone basis and do not include so-called other income, or income that’s not earned from core activities.

“The quarterly numbers have surprised on the positive and the earnings season has been moderately ahead of street expectations in light of the beaten-down expectations,” said Vaibhav Sanghavi, director of Ambit Investment Advisors Pvt. Ltd, a financial services firm. “Given the current environment, managements of companies seem to have pulled up their socks and have gone an extra mile, which has led to the increase in sales.” Business in rural areas have done better than in the cities, Sanghavi said.

Also, the fall in the value of the rupee translated into higher realizations for export-driven sectors such as information technology and pharmaceutical companies. The local currency depreciated 5.15% against the dollar in the September quarter.

Export-focused software companies benefited the most from the sharp decline, which boosted their revenues. Top software services provider Tata Consultancy Services Ltd beat analysts’ estimates with a 35% rise in fiscal second-quarter profit from a year earlier, aided by the rupee’s sharp depreciation against the dollar and robust volume growth. Rival Infosys Ltd posted a better-than-expected 3.8% growth in dollar revenue from the last quarter, signalling greater confidence after it signed five new contracts.

The fall in the value of the rupee translated into higher realizations for export-driven sectors such as information technology and pharmaceutical companies. Photo: Pradeep Gaur/ Mint

Mumbai: Fiscal second-quarter revenues of 40 firms on the Nifty index grew at the fastest pace in a year but profits saw a muted rise because operating costs and a volatile rupee played spoilsport.

The 40 companies saw net sales rising by 12.5%, the fastest in four quarters, while net profit rose 2.2%, after declining in the two preceding quarters.

For 27 Sensex companies for whom comparable data was available for 25 quarters, profits grew at 6.9% in the September quarter, while net sales rose 13.8%, both at their quickest pace in seven quarters.

All 50 constituents of the Nifty index on the National Stock Exchange have announced their earnings but Mint’s analysis is based on financial results of 40 of them, excluding energy firms and those for whom comparable data was not available for the past 25 quarters. All firms that constitute the Sensex, BSE’s 30-stock benchmark equity index, are also part of Nifty.

State-owned energy firms such as Oil and Natural Gas Corp. Ltd, GAIL (India) Ltd, and Bharat Petroleum Corp. Ltd are not included as they share a subsidy burden on account of the revenue loss for government-owned oil marketing firms from selling fuel below cost. For the sake of uniformity, Reliance Industries Ltd was also excluded.

All earnings are taken on a standalone basis and do not include so-called other income, or income that’s not earned from core activities.

“The quarterly numbers have surprised on the positive and the earnings season has been moderately ahead of street expectations in light of the beaten-down expectations,” said Vaibhav Sanghavi, director of Ambit Investment Advisors Pvt. Ltd, a financial services firm. “Given the current environment, managements of companies seem to have pulled up their socks and have gone an extra mile, which has led to the increase in sales.” Business in rural areas have done better than in the cities, Sanghavi said.

Also, the fall in the value of the rupee translated into higher realizations for export-driven sectors such as information technology and pharmaceutical companies. The local currency depreciated 5.15% against the dollar in the September quarter.

Export-focused software companies benefited the most from the sharp decline, which boosted their revenues. Top software services provider Tata Consultancy Services Ltd beat analysts’ estimates with a 35% rise in fiscal second-quarter profit from a year earlier, aided by the rupee’s sharp depreciation against the dollar and robust volume growth. Rival Infosys Ltd posted a better-than-expected 3.8% growth in dollar revenue from the last quarter, signalling greater confidence after it signed five new contracts.

The fall in the value of the rupee translated into higher realizations for export-driven sectors such as information technology and pharmaceutical companies. Photo: Pradeep Gaur/ Mint

Mumbai: Fiscal second-quarter revenues of 40 firms on the Nifty index grew at the fastest pace in a year but profits saw a muted rise because operating costs and a volatile rupee played spoilsport.

The 40 companies saw net sales rising by 12.5%, the fastest in four quarters, while net profit rose 2.2%, after declining in the two preceding quarters.

For 27 Sensex companies for whom comparable data was available for 25 quarters, profits grew at 6.9% in the September quarter, while net sales rose 13.8%, both at their quickest pace in seven quarters.

All 50 constituents of the Nifty index on the National Stock Exchange have announced their earnings but Mint’s analysis is based on financial results of 40 of them, excluding energy firms and those for whom comparable data was not available for the past 25 quarters. All firms that constitute the Sensex, BSE’s 30-stock benchmark equity index, are also part of Nifty.

State-owned energy firms such as Oil and Natural Gas Corp. Ltd, GAIL (India) Ltd, and Bharat Petroleum Corp. Ltd are not included as they share a subsidy burden on account of the revenue loss for government-owned oil marketing firms from selling fuel below cost. For the sake of uniformity, Reliance Industries Ltd was also excluded.

All earnings are taken on a standalone basis and do not include so-called other income, or income that’s not earned from core activities.

“The quarterly numbers have surprised on the positive and the earnings season has been moderately ahead of street expectations in light of the beaten-down expectations,” said Vaibhav Sanghavi, director of Ambit Investment Advisors Pvt. Ltd, a financial services firm. “Given the current environment, managements of companies seem to have pulled up their socks and have gone an extra mile, which has led to the increase in sales.” Business in rural areas have done better than in the cities, Sanghavi said.

Also, the fall in the value of the rupee translated into higher realizations for export-driven sectors such as information technology and pharmaceutical companies. The local currency depreciated 5.15% against the dollar in the September quarter.

Export-focused software companies benefited the most from the sharp decline, which boosted their revenues. Top software services provider Tata Consultancy Services Ltd beat analysts’ estimates with a 35% rise in fiscal second-quarter profit from a year earlier, aided by the rupee’s sharp depreciation against the dollar and robust volume growth. Rival Infosys Ltd posted a better-than-expected 3.8% growth in dollar revenue from the last quarter, signalling greater confidence after it signed five new contracts.

Amit kumar pandey

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