Listed companies post bumper profits despite lockdown; manufacturing firms steal the show

Listed companies in India have managed to generate bumper profits despite the lockdown to arrest the spread of the coronavirus pandemic. Nearly four thousand listed companies reported combined profits of Rs 1.5 lakh crore in the fiscal’s second quarter July-September, which is the highest profit made by all listed companies in any quarter, the Centre for Monitoring Indian Economy (CMIE) said. It is 30.9 per cent higher than the previous best record of Rs 1.18 lakh crore in Q4 FY14, which was the effort of 4,854 listed companies, CMIE added. The profits of 4,076 companies shot up 171 per cent from Rs 57,000 crore in the same quarter a year ago.

Manufacturing companies steal the show

While banks, NBFCs, construction companies, etc contributed to the growth in profits of the listed companies in Q2, nearly half the profits came from manufacturing companies. The 1,675 listed manufacturing companies in the sample made Rs 72,600 crore in net profits, which makes 47 per cent of the total PAT of the 4,076 companies in this study. This is the highest ever profit generated by the listed manufacturing companies and is 16.7 per cent higher than the previous record of around Rs 62,200 crore in Q1 FY19.

Sales fall, profits surge

It is to be noted that the manufacturing companies made this bumper profit despite a contraction of Rs 96,100 crore in net sales, and Rs 1.3 lakh crore in operating expenses. Most of the fall in operating expenses was because of lower spends on raw materials and finished goods, which fell by nearly Rs 1.2 lakh crore. Lower other income, lower net extraordinary income, higher provisioning, and higher taxes restricted the growth in profits obtained from operations; yet, these firms reported record combined profits, CMIE underlined.

Meanwhile, non-finance service companies too saw a significant rise in the net profits; however, it was mostly due to the base effect of extraordinary expenses incurred by telecom companies in the corresponding quarter previous year. On the other hand, banks too had a comfortable quarter as their income from operations rose 10.7 per cent, and other income surged by 10 per cent.