Earnings season has started at positive note said by the early birds results at India. It has occurred due to better than expected by the three organization Reliance Industries, Infosys and Hindustan Unilever. TCS and HDFC Bank also reported numbers that were largely in Street expectations.
The combined revenues of these companies were up 33.1 %YoY, growing at the fastest speed in at least 3 years. The latter was driven by RIL, whose revenues were up 57% YoY, thanks to a spike in fuel prices.
The combined net profit of 76 listed companies in our sample was up 17.2% YoY during the July-September Quarter 2018(Q2), rising at the speed in the last three quarters.
With the combination net profit of Rs. 338 billion and revenues of Rs. 3 trillion during the quarter, early birds our sample represents a third of the listed companies in terms of net profit and 16% in terms of revenues, based on company’s average earnings and top line in last four quarters.
In general, early bird companies are among the most profitable in India Inc and the earnings scorecard worsens as more companies announce their quarterly earnings.
The quarter belongs to Information technology(IT) exporters such as TCS and Infosys, which have regained and growth, gains from rupee depreciation and low based last year. Both combined net sales and a net profit of software companies grew 19.8% YoY each in Q2.
The industry’s margins are on an upward trajectory as top-line growth outpaced salary and wages for the consecutive quarter. Employee costs account for nearly 54% of revenues on average and are the key determinant of margins in the industry.
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