scorecardresearchEarly June quarter results show inflation effect on India Inc's profits:

Early June quarter results show inflation effect on India Inc's profits: Report

Updated: 25 Jul 2022, 10:44 AM IST
TL;DR.

According to the report, Banks and Reliance Industries (RIL) together accounted for the bulk of incremental growth in corporate earnings in Q1FY23.

According to the report, Banks and Reliance Industries (RIL) together accounted for the bulk of incremental growth in corporate earnings in Q1FY23.

According to the report, Banks and Reliance Industries (RIL) together accounted for the bulk of incremental growth in corporate earnings in Q1FY23.

The early-bird results for the April-June 2022 quarter (Q1FY23) hinted at a decline in earnings largely because of higher commodity prices and sharp inflation, however, corporate revenue continued to grow at a fast clip, a report by Business Standard stated.

According to the report, Banks and Reliance Industries (RIL) together accounted for the bulk of incremental growth in corporate earnings in Q1FY23. On the other hand, IT services exporters and mining & metals companies were a disappointment on this front, it added.

It informed that the combined net profit of 231 early-bird companies was up 20.4 percent year-on-year (YoY) in Q1FY23, down from a 32 percent YoY rise in Q4FY22 and a 76 percent jump a year ago. These companies reported a combined net profit of 78,825 crore in Q1FY23 — down 9.2 percent from 86,817 crore in Q4FY22 - which is the lowest in three quarters, BS pointed out. It noted that this signifies the first contraction in corporate earnings on a QoQ basis after four quarters of earnings expansion.

However, BS further stated that the combined net profit of BFSI (banking, financial services and insurance) companies surged 44.3 percent YoY to 25,835 crore in the June quarter, while RIL reported a 46.3 percent YoY jump in net profit to 17,955 crore. Excluding BFSI firms and RIL, the early birds’ combined net profit declined by 0.7 percent YoY to 35,036 crore — the lowest in seven quarters, it added.

Despite the decline in profit, BS highlighted that the combined net sales of these early birds were up 33 percent YoY to 6.5 lakh crore in Q1FY23. Top-line growth was visible across the board but the biggest jump was reported by RIL and mining & metal companies, it added, but IT services firms reported a slowdown in net sales growth during the quarter.

According to the report, IT sector's combined net profit at 18,384 crore was the lowest in the past four quarters. Meanwhile, the Mining & metals companies, which were leading earnings growth until recently, emerged as the biggest laggards in Q1FY23 following a sharp decline in earnings despite strong double-digit growth in net sales, the report further noted.

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First Published: 25 Jul 2022, 10:44 AM IST