By: ENS Economic Bureau | New Delhi |
January 31, 2022 3:00:45 am
The recovery is somewhat uneven; even as the IT services companies continued to turn in splendid results, business was dull at Bhel where order inflows were weak due to delays in tendering. (Representational)
The elevated cost of inputs punctured the margins of most in India Inc in the three months to December 2021. Operating profit margins for a sample of 432 companies (excluding banks and financials) contracted 200 basis points year-on-year as raw material costs jumped 466 basis points y-o-y. However, with aggregate revenues rising smartly – 32 per cent y-o-y for the sample – operating profits were up 20 per cent y-o-y and net profits increased a good 24 per cent y-o-y.
RIL and TCS account for just under a third of the revenues of the sample; excluding the two, revenues have increased by only 27 per cent while profits have gone up by 21 per cent y-o-y. The recovery is somewhat uneven; even as the IT services companies continued to turn in splendid results, business was dull at Bhel where order inflows were weak due to delays in tendering. At Larsen & Toubro, order inflows during Q3 were a shade below estimates.
Top-line growth was impressive as companies were able to push through price hikes even if the growth in volumes was modest. Companies with strong brands were gainers. However, high product prices appear to be keeping demand muted in some categories. Several managements point out the recovery in rural geographies, post the second wave, has been rather muted.
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