India Inc’s aggregate report card for the March 2018 quarter so far shows multi-period growth in sales, operating and net profit. But this cannot be considered as an indicator of overall growth at the end of the results season since it is largely driven by companies in the information technology (IT) and oil and gas (mainly Reliance Industries) sectors.
For a common sample of 343 companies that reported numbers in the 13 quarters to March 2018, net sales and operating profit grew at a nine-quarter high rate of 15.7% and 16.7% year-on-year. Net profit grew 14.7% — the fastest in four quarters. Operating margin improved marginally by 20 basis points to 20.1%. The sample excludes banks and finance companies.
IT and oil and gas sectors contributed 43% to the sample’s sales and 52.7% to net profit. This reflects the significant influence these sectors had on the aggregate growth. If we exclude oil and gas companies from the sample, sales growth moderated to 9.6% while net profit growth was more or less intact at 14.2%. Read More