The two faces of India Inc.'s Q3 growth story

livemint.com:

Mint analysis of the earnings of 3,478 BSE-listed companies. Excluding banking, financial services and insurance (BFSI) firms, total revenue growth returned to positive territory (3.4%) after two consecutive declines, and profits swelled by nearly 43%. Sequentially, revenues rose 3.6%, a three-quarter high, while profits shrank marginally, largely on account of smaller companies in the sample, whose profits shrank 38%.

Even on a year-on-year basis, small businesses’ profit growth lagged larger firms. Size was not the only factor dictating the hits and misses this quarter. Across sectors, too, the performance was not uniform, with rural demand remaining a major pressure point, a Bank of Baroda report dated 22 February pointed out.

The overall earnings show was impressive, but surely not broad-based. As many as 11 of the 18 key sectors covered in the analysis showed some slowdown in their net profit growth. Among them was the BFSI sector, which had largely done the heavy-lifting for corporate India earnings in recent quarters.

The sector’s profits rose 12.8% from a year ago, against a 31% growth in the September quarter. Sequentially, the sector witnessed a contraction in net profits. “With the exception of a few public sector banks, the majority of banks saw their margins remain flat or slightly decline," said Palka Arora Chopra, director at Master Capital Services Ltd.

However, the sector remained a leader in terms of revenue growth (25.9%), followed by infrastructure and engineering (17.6%), auto (16.2%), hospitality (14.2%) and textiles sector (12.3%). For nine of the 18 sectors, revenue growth exceeded the aggregate rate of 8.4%. Not too long ago, businesses faced the terror of high expenses—both on account of raw