Q2 earnings review: Topline growth slows further, margins improve

livemint.com:

Mint analysis of 3,559 BSE-listed companies showed that their combined bottomline had soared: aggregate net profit grew nearly 36% year-on-year (y-o-y), as compared with a 32% rise in the June quarter. On the flip side, topline growth has been slowing for five quarters, tapering off to low single digits in the September quarter. That growth, too, was courtesy banking, financial services and insurance (BFSI) firms.

Excluding that sector from the sample, revenues contracted 1.6% and 0.8% in the June and September quarters, respectively, on a y-o-y basis. Net profit of this sub-sample was up 40% in the last quarter. While banking firms have held up corporate earnings through their healthy business growth and improving asset quality, oil and metal firms were responsible for the downward drag.

Excluding them, topline growth swelled to almost 11%. “Topline growth for the quarter came in muted largely led by decline in commodity prices in metals and oil and gas space," said Pankaj Pandey, head of research, ICICI Securities. Small-sized companies (revenue less than ₹500 crore) were the hardest hit, with 1.3% and 20% declines in revenues and profits, respectively.

Revenues of large- and mid-sized firms rose nearly 5% and 5.6%, respectively, while their profits rose 4.9% and 5.6%. From a volume perspective, the sectoral show was again a mixed bag. Apart from robust growth in the BFSI segment, the hospitality, construction and real estate, and auto sectors exhibited healthy performance on a y-o-y basis.