Sunday, November 20, 2011

India Inc Q2 FY 2011 - 2012 Performance

Indian companies, as expected, faired very poorely in the september quarter of current fiscal year 2011 - 2012.

A quick analysis of the quarterly result of some 3000 companies revealed following facts:

 - Revenues went up by around 1.7% QoQ and 20% YoY.
 - Interest Costs went up by around 9% QoQ and 47% YoY. 
 - Net Profit fell around 9% QoQ and 36% YoY

The Interest rates in India has been consistently rising since past 1 year which has impacted the incremental capital expenditure by the companies and hence their growth.

47% YoY increase in interest cost has been the single biggest factor for a fall of 36% in Net profit for India Inc in September Quarter of FY 2012.

Similar to September quarter the December quarter of the current fiscal is also expected to be significantly bad with a high probability of Net profits falling in double digits. Hence investors should stay cautious while commiting large capital and should try to avoid companies which Debt to Equity ratio more than 1.

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