Net profit growth of 249 companies rose a creditable 21.1% year-on-year

It’s been nearly three weeks since earnings season began and about 320 companies have announced June quarter results so far. The period was a dramatic one for India with elections and a sweeping mandate for Narendra Modi.

Macroeconomic numbers, be it industrial growth, wholesale infl ation or trade defi cit, were positive during the quarter, raising hopes for an upbeat results season.

However, while there may have been a few surprises, at the aggregate level, performances have so far been average.

Since the second half of the result season is typically weaker than the first, the overall number may drop once all companies report.

Net profit growth of 249 companies, excluding those engaged in banking and finance and oil & gas, rose a creditable 21.1% year-on-year.

The main reason was a spurt in other income — which derives from activities other than the main business such as investments — and a drop in interest costs. In fact, operating profi t margin, the key barometer of performance, was the weakest in the past four quarters at 19.5%.

The drop in interest costs was primarily on account of a stable rupee while IT companies such as TCS, Infosys and Wipro led the spurt in other income.