Demand for goods and services is picking up, if one were to go by the initial set of results for the June quarter.
For the second quarter in a row, Corporate India continues to show a growth in the top line. This is after several quarters of lacklustre demand.
Following the low single-digit growth in the March 2016 quarter, net sales for about 400-odd companies, which have announced their numbers so far, grew 2.3 per cent in the June quarter. Adjusted net profits grew 11.6 per cent over the same quarter last year.
With ‘other income’ from non-core operations such as treasury and/or sale of assets showing a marginal fall from the year-ago period, profit growth was aided by stronger operational performance. Banking and finance companies have been excluded for this analysis. Consolidated numbers have been taken wherever applicable.
Do note that this is only the initial take and the final picture can change when all the numbers are in. Also, the cushion for profit growth from cheap raw materials may not be available in the quarters to come. A reversal from rock-bottom prices seen in many inputs as well as the base effect could limit the expansion in operating profits and margins of India Inc in future, unless sales improve further. A stronger revival in demand is the need of the hour.