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Indian Corporate – Rising from the Bottom

March 2, 2010

In December 2009 quarter, Indian companies recovered all the profits that it had lost in December 2008 quarter due to global factors (economic slowdown & liquidity crisis), on back of YoY sales growth of 20%. We will have a look at Sectoral Performance of the Indian industry to get an overview on how the bounce back has been.

Auto Sector is the best performing sector, and illustrated ‘Total Cost Control’. Profits scaled to new peaks, (almost knocked down to zero profitability in Dec-08). Auto Ancillaries displayed similar trend.

I.T. sector, which is highly exposed to global scenario, maintained its top-line and bottom-line. Any improvement across major global economies should again fuel the growth.

Power Sector, well insulated from domestic as well as international economic changes, maintained its profit growth rate.

In Oil & Gas sector, with KG Basin gas throughput and other new refineries coming on stream, sales for Dec-09 was exceptionally high (YoY growth of 87%), but OPM contracted significantly and is expected to remain under pressure.

Telecom sector is struggling to maintain its top-line. With the recent price war initiated among the players, other expenses are at their peak levels and net profit shrank significantly

Metal sector was unable to pass-on the rising raw material cost. As a result, operating margin contracted significantly.

Inability of metal sector to pass on the rising Raw material prices benefited Engineering & Capital goods sector, on account of which its OPM is at peak level.

Due to domestic consumption story, Sales trend for FMCG Sector was least impacted. Margins improved significantly on account of reduction in employee cost and other expenses.

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