The first set of Q4 results have thrown up some interesting trends
SEBI has extended the last date for the announcement of quarterly and annual results ending Mar-21 to June 30. Nearly 25% of the NSE-500 companies have already announced results and there are more on the way. Here are some quick takeaways from numbers put out so far.
How the top-line fared till now
Sales revenues have grown by 20.7% in the Mar-21 quarter on a yoy basis but the bigger boost to the top line came from a 79% increase in other income. If you look on a sequential basis, sales are still up by 13.7% and the other income is up by 22.4%. Sectors like cement autos and consumer goods saw growth in volumes and pricing power. The lag effect of post-pandemic recovery looks to have continued into Mar-21 quarter.
How are profits panning out
On a yoy basis, the net profits till date, are up 33.7% and largely driven by a 11.4% fall in interest outgo due to lower borrowing costs. This also compensated for higher manufacturing input costs that sectors like autos, capital goods, metals and consumer goods are facing. However, on a sequential basis, the net profit is down by 3.8%, which largely shows the diminishing impact of cost cutting programs implemented by most of the companies. It does look like the industry profits may have temporarily peaked out in the Dec-20 quarter. Taxes have been a factor in lower profits.
Key takeaways from Q4
In the midst of the pandemic and the lockdowns, there are some positive takeaways that have emerge so far. The surge in consumer goods demand that started in the Dec-20 quarter continued well into the Mar-21 quarter. Companies that have tapped the global market have done a lot better due to immunity to local COVID cycles. For example, Bajaj Auto gained due to strong global franchise. Operating and net margins appear to have peaked out in December quarter for most companies. Above all, Indian corporates have made massive efficiency gains in the midst of COVID pandemic and the resultant slowdown.
A challenge going ahead
The bigger challenge will be the Jun-21 and Sep-21 quarters. Both the quarters are likely to bear the brunt of second round of lockdowns and the consequent impact on output. CMIE has reported unemployment level at 7.97% in Apr-20 and that will be an overhang on buying power. Also, CMIE has reported that the manufacturing jobs have almost halved in the last 5 years. These are the real problems that the Indian economy will have to contend with. For businesses, it means lower purchasing power in urban areas. The big challenge for India Inc is to get back to normal sales and profit growth in the next two quarters. That also includes a hope that the pandemic is arrested, sooner rather than later!