Rising input and interest costs seem to have squeezed Corporate India’s profit margins in the last quarter of fiscal 2007-08. Companies have been able to post much higher revenues, but their profits are growing at a significantly lower rate. The net profit of the first 170 companies that disclosed their fourth quarter result as on April 23 (from A and B categories of BSE-listed companies) has grown by 18.3 per cent compared with a more robust 23.5 per cent for the corresponding period of the previous year. Revenue for these companies grew by a whopping 31.7 per cent, which is up by 10 percentage points over the previous year’s growth figure.

According to Mirae Asset Management head of equity Gopal Agrawal, “The results are on expected lines and we expected pressure on profits as a result of the higher base that companies are currently operating at and higher input costs. The cost of funds has also gone up for companies. We are expecting the profit growth for this quarter to be around 16-18 per cent.”

These are in line with the forecasts made for the quarter but are early days for the larger trend on the results, feels SBI Funds Management chief investment officer Sanjay Sinha. “To take a call on the trend of results in the middle of a results season might be misleading at times. Still, by and large the results are on expected lines. In fact, the forecasts made were more sober and the actual figures are better than those expectations.”

... contd.