Strong performance by IT companies and RIL boost India Inc’s Q2 numbers

ET Intelligence Group: The picture looks bleaker as India Inc reaches the middle of the current (June-September) results season. A sample of 236 companies excluding banks and finance companies reported a robust 26.7 per cent year-on-year growth in net sales for the September 2018 quarter. Despite this, the performance does not instil confidence since it is largely driven by a strong show from the information technology (IT) sector and upbeat numbers from Reliance Industries (RIL), the country’s petroleum refining giant which also runs a rapidly growing telecom venture.

In addition, notwithstanding their double-digit bottom line growth, the sample’s net profit grew just 3.5 per cent, reflecting weakness in the broader profitability.

The 27 IT companies and RIL together contributed 54.1 per cent to the sample’s revenue, the highest in 13 quarters. They also formed 59.8 per cent of the aggregate net profit, the highest in 11 quarters. Without their contribution, the sample’s net profit would have fallen by 12.2 per cent, a first in nine quarters, whereas net sales would have increased at a slower rate of 15.4 per cent.

Other major sectors that reported double-digit sales and net profit growth were auto ancillary, capital goods, fast-moving consumer goods (FMCG), and pharmaceuticals. The aggregate growth is expected to moderate in the coming weeks with more companies adding to the sample.