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'Corporate India gradually reverting to normalcy'
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SME Times News Bureau | 02 Dec, 2020
The Indian corporate sector has witnessed a gradual recovery back to
normalcy after experiencing major Covid-19 pandemic induced disruptions
and the resultant two-month long nation-wide lockdown, said ratings
agency ICRA on Wednesday.
The restrictions imposed to combat the
pandemic in Q1FY21, resulted in an unprecedented 33 per cent revenue
contraction, it said.
A ICRA analysis of financial results of 587
companies in the Indian corporate sector, excluding financial sector
entities, showed aggregate revenues saw growth of 34.9 per cent in
Q2FY21 from Q1FY21 levels, although remaining lower by 6.5 per cent on a
YoY basis.
Besides, margins too have registered an improvement during the second quarter.
"During
Q2 FY2021, sequential recovery from Q1 FY2021 levels was visible across
sectors as the restrictions eased, and some sectors were even able to
bounce back to pre-Covid levels and report revenue growth on a Y-o-Y
basis," said Shamsher Dewan, Vice President - Corporate Sector Ratings,
ICRA.
"Among consumer-oriented sectors, although large-ticket
discretionary purchases like leisure travel and lifestyle retail
continue to remain on the back-burner due to risk aversion and general
uncertainty, the demand in several other sectors, including passenger
vehicles, two-wheelers, consumer durables etc. have bounced back over
the past few months."
"Essential goods like FMCG and consumer
foods were not impacted materially even in the midst of the lockdown,
given their essential nature and continue to remain so."
Among
other sectors, the analysis report cited that commodity-oriented sectors
such as cement, iron & steel and metals & mining sectors also
reported sequential and YoY recovery, supported by firming up of
commodity prices as well as volume expansion; and aided by a pick-up in
industrial activity.
"Industrial and infrastructure-oriented
sectors, on the other hand, while exhibiting sequential recovery, are
yet to reach their year-ago levels, and contracted by 11 per cent and 14
per cent on a Y-o-Y basis respectively during the quarter," the
analysis report said.
"Select sectors such as IT, reported muted
revenue growth of 4 per cent in INR terms, although organic growth was
impacted by deceleration in key verticals. Sectors like pharmaceuticals,
power and telecom also recorded Y-o-Y revenue growth."
On the
profitability front, the report said that India Inc delivered a positive
performance, with both operating profit and PBT margins at
multi-quarter highs.
"Many entities aggressively rationalised
costs through salary cuts, downsizing of workforce, renegotiation of
rentals and interest rates, curtailment of overheads such as travel and
conveyance etc. from the first quarter itself in order to survive the
challenging period."
"The benefits of these percolated into the
second quarter, which coupled with sequential recovery in revenues,
aided significant recovery in margins."
Accordingly, PBT margins expanded on YoY as well as sequential basis to 9.1 per cent during the quarter.
However,
ICRA said it did not expect these margin levels to sustain, given the
raw material headwinds due to the firming up of commodity prices, and
the gradual reversion of costs to pre-pandemic levels.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
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66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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