Q2 NET PROFITS DIVE AS INPUT COSTS BITE

Persistent inflationary pressures squeezed earnings of Indian companies in the September quarter, even as revenue grew robustly, indicating demand, at least in urban areas, remained intact despite price increases.

September quarter profit plummeted 25% to levels not seen since the peak covid quarter of April-june 2021 as raw material costs surged 45% from a year earlier, a Mint analysis of 2,923 companies (excluding financials and banks) showed. However, with commodity costs softening, companies will likely see profit rebound in the coming quarters.

Net sales, however, increased 29% from the previous year, Mint data showed, indicating consumer demand remained strong despite inflation and geopolitical uncertainties.

Mitul Shah, head of research at Reliance Securities, said that the fiscal second-quarter earnings season ended with healthy revenue growth, but inflationary pressures impacted profitability.

While operating profits declined 8.64% from a year earlier, higher interest costs squeezed net profits further.