34 out of 50 industries witnessed rise in net sales in Q2FY17: Care Ratings

With the almost an end of the earning season, the companies have shown signs of improvement in growth in sales and profits for the corporate sector, a report said.

Madan Sabnavis, Chief Economist, Care Ratings, said, "Within various size groups, with the exception of the smallest category of sales less than Rs 100 crore each, there has been positive growth in sales and net profits. Further, 34 of the 50 industries considered witnessed positive growth in sales, while 21 had positive growth in net profits".

Among the leading industries were sugar, mining, passenger cars, tractors, housing finance, pesticides, consumer food, retail and engineering. The rest 16 industries witnessed negative growth in net sales of Q2FY17 with significant declines was seen in oil exploration, electronics, telecom equipment, tea/coffee, rubber products and ferrous and non-ferrous metals. Real estate construction was also down, a CARE Ratings report said.

The profit margins of 2,482 companies, excluding banks, improved to 9.7% during the quarter ended on September 30 as compared to 8.1% in the quarter ended on September 30, 2015. During the last quarter the performance of 2,460 companies registered net profit growth of 13.1% over 1.5% in the corresponding period last year, the report said.

The net sales of these 2,460 companies grew by 1.6% on top of negative growth of -5.2% in Q2FY16. The overall performance has however, been skewed due performance of banks, oil companies, IT and finance which were guided by other exogenous factors, said the report.

The 94 companies in the size range of sales of above Rs 1,000 crore each, constituted 65.4% of total sales and 80.2% of total profits of the sample companies and dominated the overall performance. The next two size ranges of Rs 500-1000 crore and Rs 250-500 crore had shares of 11.3% and 10.0% respectively and constituted the total net profit of 8.9% and 7% respectively. Hence, the top 313 companies in terms of sales above Rs 250 crore each accounted for 87% of the total sales.

According to the report, the interest cover, which is the ratio of PBDIT/interest, for 2,449 companies (excluding banking, finance, IT and oil sector), shown an improvement from 4.9 to 5.8.