The April-June quarterly results of listed companies showed a darkening effect

Mumbai, Ta. August 16, 2019, Friday

The impact of the economic downturn on Indian corporates is getting darker. Apart from the financial and energy sectors, the net profit for the three quarters of the listed companies of the country has dropped significantly, while net sales growth is at a three-year low.

According to a report by a research firm, the net profit of companies in the first quarter of the current fiscal year has been reduced by 8% on an annual basis, which was reported to have increased by 5% in the last financial year. Net profit of companies declined for the third consecutive quarter in the June quarter of the current year.

The financial position of these companies may worsen as companies move forward to raise borings in recent quarters, as the interest burden on them has increased, the report noted.

The cost of interest payments to these companies has also increased by 8% annually. Thus, interest expense increased by double digits in the fifth quarter. The combined net sales growth of these companies for the June quarter stood at 8.7% while EBDITA was at 8.3%.

Reductions in raw material costs have also affected companies' earnings. In the June quarter, the cost behind raw material has been almost constant, leading to an increase of 9 basis points in the working margin. However, the report noted that this increase in margin was not working due to poor volume growth. While the biggest lack of demand has been seen in the automotive sector, every analyst is keeping an eye on the demand for the upcoming festive season.