Sensex companies' earnings rise 7.2% in Q2

COIMBATORE: Though the earnings before interest, tax, depreciation and amortisation (EBITDA) of sensex companies have grown 7.2% year-on-year(y-o-y) to Rs 56,100 crore in the second quarter, some large caps have come up with a poor show.

Net profits of the 30 sensex companies grew 3.6% on a sequential basis to Rs 33,000 crore but dropped 2.7% y-o-y. Sales of sensex companies however grew both on a sequential (7.7%) and y-o-y (3.4%) basis to Rs 1,96,000 crore during the quarter, data shows.

“The breadth of earnings has been positive but several large caps have disappointed,” market observers said. “The earnings growth has been slightly below expectations,” said D D Sharma, senior vice president, research, Anand Rathi Financial Services.

EBITDA margins for the sensex companies improved 1% y-o-y to 28.6% while profit margins declined at a slower pace in the quarter to 16.9%, data compiled by domestic brokerage firm Motilal Oswal securities shows.

In all, 22 sensex firms made profits during the quarter with automobile majors Mahindra and Mahindra, Hero Honda and Maruti Suzuki reporting more than 90% y-o-y growth in profits. “Price hikes, full realisation of lower commodity prices and operating leverage drove up EBITDA margins (in automobiles),” analysts said.

While realty major DLF was the biggest loser in the Sensex pack with net profits plummeting 77.3%, Tata Steel, Hindalco and Reliance Communication too registered sharp declines.

Automobile, FMCG and pharma firms made gains but realty, telecom, metals, oil and gas and infrastructure companies saw a drop in profits. Automobile companies made an impressive 87% growth in profits followed by FMCG (25%) and pharma (24%). While the real estate sector saw the biggest contraction in profit margins, metals and telecom also recorded a fall in profitability.

A study of 115 major firms (excluding oil marketing companies) by Motilal Oswal showed that 51% of the companies made profit growth of above 15%, which is slightly lower than that of the previous quarter. About 35% of the firms in the group reported decline in profits.
POSTED BY:
PALLAVI SINGH
PGDM III SEM