Commodity producers, retail lenders grew fastest in Q3

The October-December 2017 quarter (Q3) saw an uptick in the growth of domestic manufacturers, especially consumer goods companies and automakers, but retail lenders and commodity producers, including energy and metal companies, saw the fastest growth in revenues and profits. Metal companies benefited from higher commodity prices and volumes. In contrast, higher input costs have begun to bite user industries with companies reporting a rise in the per unit cost of raw materials and energy during the quarter. Headline growth for India-focused companies was boosted by a favourable base effect and spillover from higher government spending, especially in rural areas. The latter also provided a demand boost to capital goods companies, but their growth was still muted due to lack of orders from the private corporate sector. Lenders saw an uptick in loan demand with their net interest income growing at the fastest pace in at least last five years. However, public sector banks (PSBs) reported losses, with State Bank of India reporting its first quarterly loss in nearly 19 years due to a surge in loan provisioning and lower other income. The key export-intensive sectors continue to face headwind with information technology (IT) and pharma players underperforming the rest of corporate India in revenue and profit growth. IT exporters reported their sixth consecutive quarter of low single-digit growth in net profit and revenues, while drugmakers reported decline in profits for the fifth time in the past seven quarters. Positively, many companies also said that the goods and services tax (GST)-related issues are now receding.