Smooth Drive ; a Business Today Study of the Report Cards of 1,528 Companies for 2004-05 Reveals That Corporate India Is Still Firmly On the Growth Path. Most of That Momentum Should Spill Over Into the Ongoing Year.

Business Today › May 31, 2005

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Summary

Never mind a few nasty surprises here and there, India Inc. is on a roll for a second successive year. Buoyed by higher-spending average Joes and Jyotsnas in uptown as well as smaller-town India, a new-found courage for capital expenditure amongst corporates, and the still-vibrant it outsourcing story, Indian companies continue to have it good. For 12 months ended March 2005, aggregate sales, based on the first 1,528 companies to declare results, have gone up by 19.37 per cent compared to the previous year. Operating and net profits have zoomed by 13.93 and 28.74 per cent respectively. That's the good part. The even better news is that there's little reason why Corporate India can't keep the good show going through the current year too (albeit not at such a breakneck pace).

"Corporate earnings in 2005-06 should move up by 15-17 per cent," says S. Naganath, President & CIO, DSP Merrill Lynch Mutual Fund. Also of significance, according to Bharat Shah, CEO and Managing Partner at ask-Raymond James, a Mumbai-based brokerage, is that the quality of earnings is improving. For example, it is not just the reported profits that are growing, cash profits too are on the up, registering a growth rate of 23 per cent. More importantly, the profit at the net level is post-tax in the truest of senses-after providing full tax liability, including deferred tax liability.

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Extract

Smooth Drive ; a Business Today Study of the Report Cards of 1,528 Companies for 2004-05 Reveals That Corporate India Is Still Firmly On the Growth Path. Most of That Momentum Should Spill Over Into the Ongoing Year.

Surf's Up

The shadow of high crude oil prices may be towering over India (and most of the world), but that isn't taking the sheen off India's bright-as-a-button growth story, which should endure for many more years. With a nominal GDP growth rate of 12-13 per cent (7 per cent real growth plus inflation of around 5-6 per cent), it is only natural to expect big corporates to show ...

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