Corporate India reports highest sales growth since September 2012

Growth concentrated in top 30 companies

by Manasi Swamy

About 1,885 listed non-finance companies in India, that have announced their financial results for the March 2017 quarter so far, point at a sustained improvement in the sales growth of Corporate India. Aggregate net sales of these companies grew by 12.2 per cent during January-March 2017, marking the second consecutive quarter of a double-digit sales growth. Corporate India had witnessed a shrinkage in business for two years, before returning to growth in the December 2016 quarter (10.8 per cent growth in sales).

It is worth noting that the sales growth of Corporate India in the March 2017 quarter is the highest since September 2012.

We present a few observations about the topline performance of Corporate India in the March 2017 quarter:

  • Growth concentrated in large companies: Only 60 per cent of the companies in our sample reported an increase in sales revenues in the March 2017 quarter. The growth was driven by top 30 companies (with quarterly sales above Rs.50 billion) which recorded a 17.4 per cent rise in their aggregate sales revenues. Performance of companies deteriorated with their size. 127 companies with quarterly sales between Rs.10 and 50 billion reported an 8.6 per cent sales growth in the March 2017 quarter. The growth of the next segment of 562 companies with sales between Rs.5 to 10 billion was even lower at 5.5 per cent. The smaller companies fared quite poorly. These suffered a 7.4 per cent fall in revenues during the quarter.
  • Growth spread across industries: Although Corporate India’s growth was driven by a handful of companies, it was not concentrated in only a few industries. Large companies across industries did well in the March 2017 quarter.

    We have organised our entire sample of companies under 22 industry groups based on their main source of revenue. Of these, 16 industry groups including textiles, automobiles, metals, hotels & tourism, trading and transport services reported an improvement in sales growth in the March 2017 quarter. Three industry groups - machinery, information technology and miscellaneous manufacturing reported a deceleration in sales growth from the December 2016 quarter, while consumer goods, railways and communication services suffered a year-on-year fall in sales.

  • Higher unit realisations pull up growth: An increase in unit realisations played a major role in the improvement of sales performance seen in the last two quarters. Wholesale price inflation, which was in the negative zone for almost two years, turned positive in the September 2016 quarter. Inflation kept rising thereafter and crossed the five per cent mark in the March 2017 quarter, contributing significantly to the sales growth.
  • Some industries see recovery in volume growth: Apart from the rise in unit realisations, some industries also saw a pick-up in volume growth in the March 2017 quarter.

    Growth in sales volumes of passenger cars picked up to 10 per cent, after decelerating to 2.4 per cent in the December 2016 quarter. Volume growth of commercial vehicles industry also improved from 0.6 per cent to 3.6 per cent in the March 2017 quarter, as companies offered huge discounts to offload BS-IV non-complaint vehicle inventory. The two-wheeler industry, that thrives on rural demand, however, continued to witness a contraction in volumes for the second consecutive quarter.

    The cosmetics, toiletries, soaps & detergents industry recovered from a two per cent sales fall in the December 2016 quarter and recorded a 5.1 per cent growth in the March 2017 quarter. The recovery was backed by pick-up in volumes of HUL, Dabur India and Godrej Consumer Products. Other FMCG companies like Marico and Emami also reported an improvement in volume growth in the March 2017 quarter.

    The textile industry’s performance improved because of a pick-up in overseas demand. Buoyed by handsome export earnings, the industry reported a nine per cent growth in sales revenues during January-March 2017, after nine consecutive quarters of fall.

    The steel industry continued to reap benefits of the protectionist policies followed by the government. It recorded a double-digit growth in volumes and over 30 per cent increase in sales revenues for the second consecutive quarter.

CMIE STATISTICS
Unemployment Rate
Per cent
3.2 -0.0
Consumer Sentiments Index
Base September-December 2015
94.9 0.0
Consumer Expectations Index
Base September-December 2015
95.4 0.0
Current Economic Conditions Index
Base September-December 2015
94.1 0.0
Quarterly CapeEx Aggregates
(Rs.trillion) Sep 16 Dec 16 Mar 17 Jun 17
New projects 2.37 1.44 2.91 1.55
Completed projects 2.21 0.94 1.81 1.02
Stalled projects 0.65 1.01 0.35 2.45
Revived projects 0.91 0.17 0.62 0.29
Implementation stalled projects 0.37 0.81 0.33 0.63
Updated on: 28 Jul 2017 9:20AM
Quarterly Financials of Listed Companies
(% change) Sep 16 Dec 16 Mar 17 Jun 17
All listed Companies
 Income 2.1 6.2 10.3 7.7
 Expenses 1.9 6.4 11.8 8.7
 Net profit 14.6 40.4 18.0 0.7
 PAT margin (%) 6.9 6.1 6.2 12.6
 Count of Cos. 4,494 4,492 4,357 320
Non-financial Companies
 Income 0.6 6.0 11.8 7.3
 Expenses -0.2 7.3 15.4 8.6
 Net profit 26.7 24.7 -0.7 -2.1
 PAT margin (%) 6.9 6.2 6.4 12.5
 Net fixed assets -9.2 7.6
 Current assets 8.1 2.4
 Current liabilities 11.6 9.3
 Borrowings 3.1 5.4
 Reserves & surplus 8.4 7.7
 Count of Cos. 3,491 3,493 3,401 232
Numbers are net of P&E
Updated on: 28 Jul 2017 9:30AM
Annual Financials of All Companies
(% change) FY13 FY14 FY15 FY16
All Companies
 Income 12.6 9.9 5.0 1.0
 Expenses 12.8 9.8 5.1 1.2
 Net profit 1.0 -2.3 1.4 -14.2
 PAT margin (%) 3.5 3.2 3.2 3.1
 Assets 14.3 12.3 9.4 8.7
 Net worth 9.6 9.6 8.8 7.6
 RONW (%) 6.8 6.2 6.1 5.4
 Count of Cos. 25,169 22,706 21,937 18,146
Non-financial Companies
 Income 11.9 9.6 4.1 0.0
 Expenses 12.2 9.3 4.3 -0.6
 Net profit -8.5 -2.7 -5.9 8.1
 PAT margin (%) 2.4 2.2 2.2 2.8
 Net fixed assets 12.9 11.6 13.2 12.6
 Net worth 7.8 8.6 7.4 6.9
 RONW (%) 5.5 5.1 4.9 5.6
 Debt / Equity (times) 1.1 1.1 1.1 1.0
 Interest cover (times) 2.1 1.9 1.9 2.1
 Net working capital cycle (days) 72 69 67 66
 Count of Cos. 19,615 18,084 17,557 14,859
Numbers are net of P&E
Updated on: 22 Jul 2017 1:04PM

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