In Focus: Promising Numbers

The result season started with a bang as the tech majors came out with strong numbers to boost the morale of the markets, taking the Sensex closer to its previous highs. At the time of this analysis, results of 265 companies were available. Taken together, these companies registered over 35 per cent increase in both top line as well as the bottom line during the quarter ending March 2007, in comparison to the corresponding quarter last year.

Here is the sectoral analysis of the results declared so far.

Technology: Well Programmed
Once again, technology stocks led from the front. Taken together, the 28 companies in this space that have declared results so far recorded an 86 per cent growth in sales, while the profits followed closely with a growth rate of 71 per cent.

Infosys achieved a 43 per cent growth in the top line, while profit surged 69 per cent. Many of the smaller IT firms like GTL, Vakrangee Software, Tata Elxsi also posted robust numbers.

Basic/Engineering Cos Remain Robust
Thanks to the capex wave sweeping the country, the companies operating in the basic/engineering sector did brisk business during the last quarter. The 25 companies of this sector whose results were available, posted a 53 per cent growth in sales and 29.3 per cent growth on profits.

ABB recorded an over 60 per cent growth in net sales as well as PAT. Siemens, however, had mixed fortunes. While its sales grew phenomenally by 91 per cent, the PAT declined by 8 per cent. The fall in profits has been largely because of a substantial decline in other incomes, which constituted 5 per cent of its total income in the previous quarter, but have accounted for only 0.5 per cent this time.

Cement Cos Post Concrete Results
Cement sector has found the going quite tough in the last few months. The regulatory whip has hit the cement stocks hard and they have been hammered on the bourses. On an average, cement stocks are down 17 per cent since the start of the year. Even many of the fund managers have been exiting them during this time period.

But the result season may signal a revival in their fortunes to generate fresh buying interest in them. Some of the prominent cement companies like Gujarat Ambuja Cements, India Cements and ACC have impressed with their quarterly numbers. ACC’s top line grew by 26 per cent, while the bottom line clocked a 46 per cent growth.

Auto in Top Gear
While the results of many of the top automobile companies were not yet available, but the ones declared so far paint a promising picture. Market leader Maruti posted a jump of 35 per cent in net sales, while the profits grew 24.3 per cent. Results of two auto ancillaries companies —Clutch Auto and Sona Koyo Steering Systems —were particularly noteworthy.

Clutch Auto is India's largest clutch manufacturer and exporter. Its net sales for the quarter ending March 2007 recorded a growth rate of 84 per cent and the profits also kept pace with the top line to grow 73 per cent. Sona Koyo’s sales and profits grew by 83 per cent and 91.4 per cent, respectively.

Pharma: A Mixed Bag
Ranbanxy Laboratories, the country’s largest drugmaker, enthused the markets with 26 per cent and 111 per cent growth in sales and profits, respectively.

However, Cipla — another pharma major — put up disappointing numbers. It recorded just under 8 per cent growth in net sales, while the profits declined by 34 per cent.

In the banking domain, HDFC Bank was the only major player to have come out with its result so far, and it did quite well. Its total income grew 42 per cent, while the profits were up 30.5 per cent.