Be­hind the Num­bers

Business Today - - FROM THE EDITOR - pros­en­jit.datta@in­to­ @Pro­saicView

OUR AN­NUAL BT 500 is­sue tracks the stock per­for­mance of the top-listed com­pa­nies in In­dia and also their per­for­mance in terms of rev­enue growth and profit growth, apart from other pa­ram­e­ters such as as­sets and debt. The 12-month pe­riod for this year’s study was from Oc­to­ber 1, 2017 to Sep­tem­ber 30, 2018. This al­lowed us to take the up­dated fi­nan­cial year re­sults of the top 500 listed com­pa­nies that form our uni­verse. The num­bers point to the fact that op­ti­mism, rather than fun­da­men­tal improve­ment in busi­ness, drove the eq­uity mar­kets in the pe­riod un­der study. The mar­ket cap­i­tal­i­sa­tion of the top 500 com­pa­nies went up by 23.4 per cent. The Sen­sex went up 15 per cent while the Nifty went up by 10.9 per cent. (They have since fallen – the Sen­sex by 8.7 per cent and the Nifty by 8.9 per cent between Oc­to­ber 1 and Oc­to­ber 26, the day of go­ing to press). On the other hand, the ag­gre­gate rev­enues of the top 500 went up by a measly 11 per cent between FY ’17 and FY ’18, while the ag­gre­gate net profit dipped by 12.2 per cent. The good news was that while as­sets rose by 12 per cent, the ag­gre­gate gross debt of top 100 com­pa­nies went up by 6.4 per cent, show­ing that com­pa­nies were be­com­ing more pru­dent.

A look at the longer term num­bers shows, though, the rev­enue growth in the past year was more ro­bust than in the pre­vi­ous four years, prof­itabil­ity still re­mains a ma­jor con­cern.

Mean­while, the stock mar­kets have started wor­ry­ing about the stream of neg­a­tive news com­ing in. The IL&FS scam trig­gered off wor­ries that there would be a domino ef­fect on the whole fi­nan­cial sec­tor, though, the gov­ern­ment moved quickly to take de­ci­sive ac­tion and took charge of the com­pany. The ris­ing crude oil prices, fall­ing value of ru­pee, fail­ure to get ex­ports to grow de­spite lower ru­pee val­ues, short­fall in indi­rect tax col­lec­tions, and with­drawal of money by FIIs from stock mar­kets were the other fac­tors spook­ing the mar­ket apart from un­cer­tain­ties caused by global trade war.

Will the next year be bet­ter? Re­sults of busi­ness con­fi­dence sur­veys have shown mixed re­sults. Three sur­veys – one con­ducted by NCAER, the RBI’s in­dus­try out­look sur­vey and Busi­ness To­day’s Busi­ness Con­fi­dence Sur­vey – show that busi­ness con­fi­dence and ex­pec­ta­tions of the fu­ture have dipped sharply. Two other sur­veys, one by CII and the other by Dun & Brad­street, show that busi­ness con­fi­dence is ris­ing a bit, though, in­vestors in the stock mar­kets seem de­cid­edly pes­simistic of late.

Go­ing for­ward, the cor­po­rate world will also have to deal with the ugly truth of sex­ual ha­rass­ment which makes many women leave the work­force. The #MeToo move­ment has brought to the fore an is­sue that had re­mained buried un­der the car­pet for too long. Se­nior Edi­tor Ajita Shashid­har and As­sis­tant Edi­tor Sonal Khetarpal look at the prob­lem within busi­ness or­gan­i­sa­tions in their story (page 152).

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