India Inc's Q4 net up 18% on tech support

MUMBAI: A weak rupee, which contributed largely to the robust performance by Indian IT biggies, saved the day for India Inc during the January-March quarter (Q4FY14). With a 27% rise in revenues from the IT companies, the aggregate revenue of 70 top manufacturing and services companies that have announced their results so far rose by a decent 12.4% to Rs 1.12 lakh crore and the net profit by 18.3% to Rs 22,237 crore during Q4FY14.

But if one excludes the top 10 IT pack, the rise in aggregate revenues of the 60 companies is just 1.7% at Rs 60,854 crore and that of net profit is 0.5% at Rs 10,108 crore, an analysis by Crisil Research showed. The analysis did not include banks and oil companies.

The contribution of IT companies at the aggregate level was even more pronounced if one looks at the ebitda (earnings before interest, taxes, depreciation and amortization) margin. While the ebitda margin for 70 companies grew 144 basis points (100 basis points = 1 percentage point), excluding the IT pack ebitda margin contracted by 49 basis points (bps).

"The IT sector continued its robust performance with strong revenue growth and healthy expansion in margins, while domestic demand-driven sectors such as cars and utility vehicles, and cement continued to face headwinds in terms of growth as well as profitability," Mukesh Agarwal, president, Crisil Research, said. The analysis also showed that the aggregate revenues of the cars & utility vehicles segment (including Maruti) declined by 9.5% on an annual basis, on account of a 5.5% drop in sales volumes.

In the banking sector, growth of private banks' net interest income (NII) - one of the prime measures of performance of lenders - continued to decline during Q4FY14 because of slowing credit growth. On the positive side, the quality of assets of these banks did not deteriorate, Agarwal said. "Even in the current quarter, the gross non-performing assets have declined by 4 bps on a yearly basis to 1.7%," he said.

Data showed that the aggregate NII of seven private sector banks was Rs 14,404 crore, a rise of 16% during Q4FY14 while for the fiscal 2014 the rise was 20%. Net profit growth for these banks too slowed during Q4FY14 to 18%, compared to 22% for FY14.