Kotak securities: Impact of Quarterly results

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Quarterly results and impact: Five things to noteThe exercise of announcing financial results for the July-September 2012 quarter is over. Analysts are crunching data to get leads on the picture that lies ahead. Analysts start look at numbers to find out stocks that could see headwinds on profitability going forward. Every stockbroking firm has a universe of companies it tracks closely for financial performance each quarter. Here are five key takeaways: 1) Sales growth: Overall, companies reported a growth in sales during this quarter. However, the pace of growth slowed yet again for businesses. According to Morgan Stanley, a global bank, the sales growth slowed for 1,179 companies they track each quarter to 12 per cent from 16 per cent in quarter to June 2012. The year-on-year growth comparison is made to the quarter in the preceding year. This is the slowest pace of the sales growth for these companies since March 2009, the bank said. 2) Profit growth: The profitability of top companies was better than small companies. The net profit for top 131 companies with sales of over Rs 1,000 crore grew 36 per cent. Morgan Stanley’s sample of 1,179 companies saw the net profit growing at 20 per cent, the best in six quarters. However, the story was different for smaller companies. According to the Mint newspaper, for 2,739 companies with sales of up to Rs 500 crore, the net profit fell 13.26 per cent. This implies that rising input costs, high interest rates and an economic slowdown hurts smaller companies more than the large ones.   3) Who did well: Share prices of large companies like Titan Industries, Glenmark Pharma, Maruti Suzuki, Larsen & Toubro and Mahindra & Mahindra rose 5 to 9 per cent soon after results announcements. This is because these companies reported better than expected profits. The stock market either expects these companies to achieve their annual targets for profit growth or exceed them.   4) Who struggled: Share prices of large companies like Infosys, Cadila Healthcare, Dabur, Crompton Greaves and Dish TV fell 5 to 9 per cent soon after they announced their results. This is because their net profit fell below the market expectation. The stock market expects a lot of hard work for these companies to achieve their target profit growth.   5) Outlook: Companies in the IT services sector have largely painted a challenging picture. India’s exports are driven by IT firms. They believe that a slowdown in the global economy could delay decision making by global corporations on outsourcing and other spending on IT. Companies that are dependent on India’s economic growth could see a steady growth. Most analysts expect profits to grow at 10 per cent for the year ending March 2013. Many expect the profit growth for India companies to be better as interest rates start to decline. .

The impact of the economic slowdown and high cost of money was felt by small companies. Read More    Now that you have financial statements from a large number of companies, here is a link that could help you appreciate those numbers. Read More

0.3%Banks have virtually refused lending to small and medium sized companies over the past six months. This is perhaps reflected in the decline in profitability of small companies. Loans to small firms grew 0.3 per cent to Rs 2,60,000 crore in the six months to September 2012, according to the Mint newspaper. They actually fell 4.3 per cent to Rs 1,90,000 crore for medium-sized companies. For large companies, loans grew 3.6 per cent to Rs 15,50,000 crore. This indicates that banks were risk averse over the past six months and were happy to lend to only large companies.