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Keeping The Pace

| 11/8/2010 12:35 PM Monday

The results season is on and the corporate report cards continue to flow in. Though the results have become more of a regular ritual that occur every quarter, it continues to attract as many eyeballs from investors since it gives them a clear picture of the current state of India Inc and also indicates what to expect in the coming period. Thus, quarterly results would never lose their relevance. And this is especially true when the market is at a juncture where Sensex is trying to testing its previous peak. Thus with the market consensus expecting the Sensex to sustain at the current levels and even go past its previous peak, the relevance of the September quarter results attain huge importance and hence the investors’ curiosity. We too at Dalal Street Investment Journal want to understand the results and hence have gone ahead and dissected the numbers that have come so far.

With the 1,337 results that we have with us so far for Q2FY10, India Inc has posted a topline growth of almost 19.30 per cent while the bottomline grew very sharply by almost 40 per cent on a YoY basis. Out of the total number of results, 982 companies’ sales have grown, 289 companies’ sales have declined, and 66 companies have posted no growth. Similarly, out of the total results so far, 847 companies’ profits have grown, 449 companies’ profits have declined, and 41 companies’ profits have indicated no growth. Surprising as it may seem, but that’s what the initial numbers tell us. But before we come to that conclusion let us walk the extra mile and clear out the aberrations, i.e. the refinery and the extraordinary items.

Thus on adjusting the refinery and the extraordinary numbers from overall India Inc results, though the overall topline growth continues to remain strong at almost 20 per cent, what has drastically changed is the bottomline figure which has shrunk sharply to just single-digit growth of 9.38 per cent. These are very contrasting pictures indeed when adjusted for the aberrations. In fact, on a sequential basis as well the numbers do present a contrarian view with bottomline growth of a mere 2 per cent while the topline has grown by a little over 8 per cent. Did we miss out on something here? They say devil lies in the details as even a single factor could change the entire picture and perception about the data presented. Similar seems to have occurred this time when we suddenly came across the details of the extraordinary items of India Inc, which have seen a massive jump of 1752 per cent to Rs 17,513 crore (Rs 946 crore) in the September 2010 quarter. The extraordinary items had a much bigger story to tell and it was one

 

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