NEW DELHI: India Inc’s earnings during the first quarter of the current fiscal year have been dented by a pan-sector consumption slowdown. A perusal of the balance sheets of Nifty 50 companies shows that apart from the 10 banking and financial services entities on the index, the rest have recorded a cumulative 11.6 per cent fall in net profits on an annualised basis.
Financial data for the quarter filed with stock exchanges shows that 40 non-financial Nifty 50 companies saw a sharp slowdown in both revenues and profits. Total sales turnover during the quarter grew a much slower 5.9 per cent compared to 9.9 per cent in the previous quarter (Q4FY19) and 23.2 in the first quarter of the previous year (Q1FY19), while total earnings fell 11.6 per cent compared to a growth of 7.8 per cent (Q4FY19) and 21.3 per cent (Q1FY19).
“The non-BFSI (Banking and Financial Services) space continued to witness an impact of subdued market sentiment, low consumer discretionary, liquidity tightness and slow private sector capex,” noted Centrum Wealth Research in its Q1 earnings analysis.
Revenues of consumer-facing sectors like automobiles and fast moving consumer goods were impacted by muted volumes owing to low discretionary spends, Centrum analysts said, adding that other sectors were affected by a multitude of other factors, including rupee fluctuation for IT firms, slow progress of monsoon for agri-sector facing entities and an overall delay in private sector capital expenditure, which hit infrastructure firms.
“A few other companies (in non-BFSI) reported lower profitability on account of margin pressure given the slower-than-expected revenue growth, high costs and discounts (in case of auto companies). However, lower commodity prices/crude oil gave some respite,” it added.
Among Nifty 50 companies that posted the worst standalone earnings for the quarter were Bharti Airtel (net loss of Rs 1,302 crore), Tata Motors (net loss of Rs 3,604 crore), Maruti Suzuki India (31.7 per cent fall), JSW Steel (56.9 per cent fall), Tata Steel (68 per cent) and Hindalco Industries (27.9 per cent). Oil sector firms like Indian Oil, Bharat Petroleum and ONGC have also seen profits fall due inventory losses and falling crude prices.
BFSI leads the way
The only saving grace during the period were banking and financial services companies, which have seen a large increase in earnings as provisioning for bad loans fall and a low base during the same period last year. The 10 BFSI companies on the Nifty 50 index posted a whopping 149.9 per cent year-on-year increase in earnings during the quarter and 14.3 per cent increase in revenues, effectively pulling up earnings growth for the entire Nifty 50 universe to a meagre 2.5 per cent and revenue growth of 6.3 per cent.
Sharp slowdown
Around 40 non-financial Nifty 50 companies saw a sharp slowdown in both revenues and profits in Q1. Total sales turnover grew a slower 5.9% compared to 9.9% in Q4FY19 and 23.2% in Q1FY19, while total earnings fell 11.6% compared to 7.8% growth in Q4FY19 and 21.3% in Q1FY19.