Com­pa­nies look to pro­tect prof­itabil­ity as topline comes un­der strain

The Economic Times - - Companies: Pursuit Of Profit - Ran­jit Shinde & Shaliesh Kadam

ET In­tel­li­gence Group: A ma­jor­ity of sec­tors have so far re­ported either a de­cline in or lower growth year-onye a r i n s a l e s a nd p r o f i t i n t he De­cem­ber 2016 quar­ter com­pared with the pre­vi­ous quar­ter. The pain is, how­ever, not fully re­flected in the ag­gre­gate num­bers due to a rel­a­tively bet­ter show by the in­for­ma­tion tech­nol­ogy (IT) sec­tor. It con­trib­uted one-third to the to­tal rev­enue and nearly half to the to­tal net profit of a sam­ple of 597 com­pa­nies that have so far de- clared re­sults for the quar­ter. The sam­ple’s net sales in­creased 4.3% year-on-year, marginally lower than the 5.1% growth in the pre­vi­ous quar­ter. It was also the slow­est growth in five quar­ters. Net profit rose by 19.6% com­pared with 18.3% in the Septem­ber 2016 quar­ter. The sam­ple ex­cludes com­pa­nies from bank­ing and fi­nance, and oil and gas sec­tors. The op­er­at­ing mar­gin at 17.7% was sim­i­lar to that in the pre­vi­ous quar­ter, re­flect­ing the ef­forts taken by com­pa­nies to pro­tect prof­itabil­ity at a time when sales growth is muted. Sect o r s s uch a s c o nstruc­tion, FMCG, hospi­tal­ity, me­dia and en­ter­tain­ment, real es­tate, and tex­tiles, re­ported a ye a r - o n - ye a r d r o p i n r e ve n u e. Sec­tors that re­ported lower growth in rev­enue were auto and an­cil­lar­ies, chem­i­cals, and con­sumer durables.

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