Listed firms post superlative profits

Listed companies, which have already published their results, have registered more than a 200 per cent growth in profits in the March 2021 quarter following a tighter control on expenditure. This would be the third consecutive quarter of superlative profits, according to CMIE.

The companies grew their top-line by 14.7 per cent in the March 2021 quarter against the same quarter last year. But net profits expanded by 212.4 per cent. In the March

2021 quarter, 935 companies have booked a profit of `1.58 lakh crore.

The companies managed to book superlative profits because of higher growth in profit margin. Compared to a 0.2 per cent profit margin in the March

2020 quarter, the companies managed to clock a

10.8 per cent margin in the March 2021 quarter, the highest rise in recent years.

In the March 2021 quarter, financial services companies saw a 2.1 per cent increase in the topline and a 2.1 per cent fall in total expenses as a result, net profits expanded by 65 per cent.

In the same quarter, nonfinance companies saw topline expand by 18.6 per cent and total expenses grow by a much lower 8.9 per cent. As a result, net profits grew by 295 per cent. The share of nonfinance companies in total profits of the corporate sector increased from 73 per cent in the quarter ended September 2020 to 78 per cent in the quarter ended March 2021.

Further, the companies controlled expenses in spite of a significant increase in raw material costs. In the March 2021 quarter, non-finance companies saw their topline grow well. But, this growth was accompanied by an increase in raw material costs. However, a tighter control on other costs delivered high profits during the quarter.

Manufacturing companies recorded a 22.9 per cent increase in net sales during the quarter ended March 2021. Growth in raw material expenses was close at 18.6 per cent. But the companies kept other expenses in much greater control. Wages grew by 10.3 per cent and other expenses shrunk by

1.8 per cent. Overall operating costs of manufacturing companies grew by

11.9 per cent although raw material expenses grew by

18.6 per cent. Further, interest costs declined by

20.2 per cent. The much lower growth in or shrinking of costs of manufacturing companies helped them see a 610 per cent increase in profits.

“Nearly three-fourths of the listed companies are yet to declare their financial performance during the March 2021 quarter. These companies collectively made profits of about `25,000 crore in the September and the December 2020 quarter each. Assuming similar orders of magnitude to continue, total profits by listed companies could touch `1.8 trillion in the March 2021 quarter,” said Mahesh Vyas, the chief executive officer of CMIE.