Indian Companies Get Festive Boost; About 62% Increase in Post Profit: September Quarter Roundup
November 11, 2022: Apparel retailers, restaurants, banks, construction companies saw a surge in sales and orders, as the country prepared for its first pandemic-free festive season in two years.
About two-thirds of nearly 200 Indian companies with market capitalizations of $100 million and above reported a rise in profits in the September quarter, data tracked by Reuters showed.
Of the 191 companies tracked, 118 reported an increase in profits, with Refinitiv data showing that nearly 90% posted quarterly revenue increases.
Apparel retailers, restaurants, banks, construction companies saw a surge in sales and orders, as the country prepared for its first pandemic-free festive season in two years.
Consumers bought food and other supplies even amid burning inflation. “There is definitely a festive boom that cannot be denied and that is reflected in the earnings performance,” said Vivek Kumar, economist at Mumbai-based Quanteco Research.
“There was also some comfort in the quarter as input prices moderated and demand picked up. All these factors came together to help.”
Retail sales in India peak during Diwali, the festival of lights, when Indians typically splurge on apparel, accessories, consumer goods and automobiles.
This year’s Diwali fell on October 24. “This is the first Diwali after COVID where people can go out and mingle with their friends and family and that is definitely helping,” Shoppers Stop Ltd Chief Executive Officer Venu Nair told Reuters after the department store chain posted a September quarter profit. , on the loss from a year ago.
Nair said he expects sales to top pre-pandemic levels in the festive quarter. India’s top carmaker Maruti Suzuki reported a four-fold jump in quarterly profit, while construction bellwether Larsen & Toubro Ltd saw a surge in order inflows on a revival in investment in infrastructure with work on several buildings, factories, metros and other projects.
Continues as Covid-related restrictions ease. L&T’s earnings are often viewed by analysts as a proxy for capital spending in the economy, as it undertakes public and private infrastructure projects.
India’s capital expenditure rose nearly 50% from last year to 3.43 trillion rupees in the April-September period, government data showed.
Meanwhile, Anarock Property Consultants has forecast that housing sales this year will breach the previous peak of 2014 due to strong momentum in festive demand and strong performance in the first three quarters.
Restaurant revenue grew more than 90% from last year, followed by apparel and accessories, power, construction, chemicals, banks and autos, Refinitiv data showed. State Bank of India (SBI), the country’s largest lender, reported a record quarterly profit and forecast a double-digit credit growth.
“(In) an uncertain and fragile global economic environment, the Indian economy has shown resilience,” SBI Chairman Dinesh Kumar Khara said in an earnings conference call.
Aggregate demand indicators showed that growth momentum was kept very strong by the onset of the festive season and increased demand, he added.
Companies including Fortune cooking oil brand owner Adani Wilmar, which has weak demand in rural India, said easing prices of some essential commodities and a late revival in monsoon rains helped boost sales.
India’s retail inflation rose to a five-month high of 7.41% in September, but analysts said much of the impact was projected by markets as well as consumers.
“Inflation is currently in the amber zone and is expected to transition to the green zone in the next two quarters,”
QuantEco’s Kumar said. India’s inflation is likely to slow to 6.73% in October due to weaker food prices and a stronger base than a year ago, a Reuters poll of economists predicted.
“With the monetary policy response already in line, the impact on domestic demand conditions is likely to moderate,” Kumar added. “An expected sharp slowdown in external demand will cause a decline in earnings in the next quarter.”
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