Behind the Numbers
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).