For India’s leading companies, the quarter ended March has been a washout. The combined net profit of the 43 companies in the benchmark National Stock Exchange Nifty index that have declared their results so far has halved during the quarter compared to the corresponding period a year earlier. The Nifty index comprises 50 companies.
This makes it the worst quarter for Nifty companies since the September 2008 Lehman collapse, when there was a sudden drop in revenues and profits of commodity producers, automobile makers and banks, as credit markets were squeezed.
In the March 2015 quarter, the combined (reported) net profit of the 43 companies fell 51.6 per cent to Rs 33,854.30 crore from Rs 68,979.4 crore in the year-ago quarter.
India Inc’s performance in the quarter ended March was hit by tepid growth in demand, both in India and abroad, a fall in metal and energy prices, adverse exchange rate movement and large write-downs in the value of assets (in case of Vedanta and Tata Steel) due to global commodity headwinds.
As many as 23 Nifty companies reported an annual decline in reported net profit. Their poor performance more than offset a better-than-expected show by a handful, reducing the aggregate profit. These companies accounted for 38.3 per cent of the combined market capitalisation of all the 43 Nifty companies at the end of trading on Thursday.
Excluding the impact of exceptional gains and losses, the combined net profit of the 43 companies was down 13.6 per cent on a year-on-year basis, while operating profit was lower by 14.8 per cent, indicating the operational headwinds faced by India Inc.