Corporate profits rose 15% to an all-time high in the September quarter as margins widened on lower input costs and better utilization levels, the research industry said on Monday. from the main rating agency Crisil.
From an absolute standpoint, earnings before interest, taxes, depreciation and amortization (Ebitda) hit a record Rs 1.60 lakh crore in the September quarter, compared to Rs 1.02 lakh crore in the June quarter. precedent, he said.
It can be noted that the trend of growing corporate profits even as the economy contracts due to the pandemic has led some observers to voice their concern, saying it illustrates widening inequality.
Crisil, who analyzed a sample of 800 listed entities representing 85% of NSE’s market capitalization in sectors other than banking and finance and oil and gas, said improved usage levels, as well as better management large corporate electricity, fuel and raw material costs contributed to strong earnings growth.
Overall operating profit margins improved by more than 1% despite an increase in the cost of raw materials during the quarter, he said.
From a labor cost perspective, which is of concern, he said that 370 manufacturing companies in his sample showed a 4% contraction, while the service sector showed moderate growth.
The profit growth came even as revenue did not increase, the report said, noting that revenue was “stable” in the second quarter compared to the period last year after falling by 29 % during the quarter from April to June.
Small businesses have taken the brunt of the revenue impact compared to large ones, he said.
“The big players have seen their incomes slow. However, the smaller players, who generally have low bargaining power and limited liquidity, have remained in the red. The smaller the company, the more excruciating the pain,” he said. he declared.
He pointed out that less than 20 percent of the 400 smallest companies recorded revenue growth, compared to nearly 35 percent of the top 100 companies that recorded growth in the first half of the fiscal year.
In sectors related to consumption and raw materials, most of the big players saw growth in the second quarter, while their smaller counterparts declined, while among exporters, small textile companies, ready-made garments and cotton yarns have suffered from chronic pain, while IT departments have shown resilience with both large and small players showing steady sequential growth.
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