The corporate results of first quarter of FY24 so far (excluding financial services firms) have reflected a substantial surge in profits but a decline in net sales,. Out of the 635 non-financial companies that have reported their results, the combined sales have decreased by 2.82% to reach ₹13.91 lakh crore, according to data from the CMIE. Remarkably, even Reliance Industries, the country’s largest revenue-generating company, faced a 4.69% drop in revenues, totaling ₹2,31,132 crore, alongside a 10.8% decrease in net profit, amounting to ₹16,011 crore.

What stands out, however, is the substantial 62% surge in the collective profits of these firms, reaching ₹1.32 lakh crore. This growth is largely attributable to an 11.85% reduction in operating expenses, which amounted to ₹11.53 lakh crore. Notably, there has been an 18% decrease in the cost of raw materials, amounting to ₹7.98 lakh crore, while salaries and wages saw a 12.92% increase, reaching ₹1.20 lakh crore. For instance, Hindustan Unilever, a major player in the FMCG sector, saw a significant increase in gross margin by 251 basis points, standing at 49.9%. However, despite this, factors such as a 9.9% rise in ad-spends as a percentage of sales, a 9% increase in employee costs, and a 20.2% rise in other costs resulted in an 8.4% growth in operating profit, totaling ₹3,521 crore. The EBITDA margin also showed improvement, reaching 23.2% (up by 49 basis points). Similarly, Bajaj Auto’s operating profit soared by 51% to reach ₹1,954 crore for the quarter. The company attributed this performance to dynamic pricing strategies, effective cost management, foreign exchange advantages, and operating leverage. The trend of India Inc reducing its debt was also evident in the interest payments, which stood at a mere ₹26,666 crore, a minor drop of less than 1%. Simultaneously, total tax provisions saw a nearly 50% increase, reaching Rs 43,455 crore during the quarter.

Among the financial services firms, results from 194 companies reported by the CMIE showed a 28% increase in total income, reaching ₹39.24 lakh crore during the quarter. The net profit after adjusting for prior period income and extraordinary income also rose by 51% to ₹65,649 crore. Motilal Oswal Financial Services attributes the financial sector’s performance to steady earnings growth within the banking sector, despite several banks facing changes in their margin trajectories. Notably, ICICI Bank, a leading private sector lender, reported a 39.7% surge in net profit, reaching ₹9,648 crore during the quarter, primarily due to improved asset quality on a sequential basis. The overall asset quality in the financial sector has improved, with special mention accounts (SMA) and the restructured pool being well managed. Even non-banking financial companies (NBFCs) demonstrated healthy disbursement momentum in the seasonally weak Q1, driven by strong underlying demand and sectoral tailwinds, as noted by MOFSL.

An analysis of the results from 33 companies, accounting for 77% weightage in the Nifty 50 index, revealed a notable 43% year-on-year (YoY) increase in cumulative profits. This growth was led by Tata Motors, BPCL, HDFC Bank, ICICI Bank, and Axis Bank. These five companies contributed 93% to the overall YoY earnings growth. According to a report, only nine companies in the Nifty index reported profits below expectations, while 12 exceeded expectations, and 12 were in line with expectations. Tata Steel, Reliance Industries, and UPL were the main contributors to the drag on Nifty earnings.

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