Big caps like Reliance Industries, Reliance Communications and Bharti Airtel might have disappointed investors with their lower profits, but India Inc in general is sailing smoothly if the results for the second quarter are any indication. Results of 1,990 top companies indicate that their net profits have risen by 38.70 per cent in Q2 of 2009-10 when compared with the same quarter in the previous period.

However, total income (sales and other income) of the corporate sector has taken a beating following a dip in demand and slow growth in industrial production. Total income dipped 5.45 per cent to Rs 760,517 crore from Rs 804,340 crore in the same quarter last year.

A study by the FE Research Bureau reveals that these companies made a total net profit of Rs 70,791 crore as against Rs 51,038 crore in Q2 of last year, thanks to cost cutting, restructuring and tight controls on expenditure. Though the higher profits were against the backdrop of lower base last year, analysts said the corporate sector has redeemed itself with a better show, thereby adding to overall investor sentiment and economic growth. Telecom and oil sector companies were under pressure while banks, technology, auto and cement showed good results. Aviation companies continued to be in the red with three airlines making a combined loss of over Rs 900 crore.

According to an analyst with Sharekhan, the adjusted earnings of the companies in the Sensex are estimated to decline by 1.9 per cent during the second quarter of FY2010. “The expected 2.8 per cent year-on-year (y-o-y) decline in the earnings of the Sensex (ex-oil companies) would mainly be achieved on the back of a relatively better performance in the automobile sector (a 64.2 per cent y-o-y earnings growth), cement sector (a 43 per cent y-o-y earnings growth) and capital goods sector (a 22.5 per cent y-o-y earnings growth),” he said.

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