Problem @ Bottom of Pyramid L: 4QFY13: Result Analysis
Following are the key points that emerges from the analysis.
o This quarter (4QFY13), consolidated profit of India Inc shrank by 11.4%.
o The most concerning thing about this quarter’s result is 100% vanishing of small cap companies profits, given the fact that in Mar-12 quarter, profits were already down by 40+%.
o Companies (Large, mid or Small) were able to maintain their sales but most of them were unable to maintain the profits margin, so PAT fell in case of all the 3 categories, pushing small cap in “LOSS TERRITORY”. Notably, this is the 1st quarter in past 10 years, where small cap companies showed loss.
o Small Cap facing tough time, lost entire grip, may have “Rippling Effect” on Indian Economy : Negative Margins, raises the doubts, if small cap companies will continue their businesses, as generally, they don’t have strong balance sheet. Shutting down of small cap companies will have rippling effect on the economy, as Smallcap companies cater to the demand of Mid size companies which in-turn cater to the large companies. If policy measure fails to help small companies, further slowdown in the economy is inevitable. So, the problem is at the bottom of pyramid.
o Power, I.T., FMCG, Pharma, Media and Real estate were the notable sectors which boosted the overall profitability of India Incorporation. Their weights have increased significantly.
o Telecommunication, Auto, Metals & Mining, Fertilisers, Sugar, Shipping, Cement and Eng & Capital goods were the notable sectors who acted as dragger for overall profitability of India Incorporation. Their weights have decreased significantly.
o Note that the analysis, excludes BFSI and Oil & Gas Sector.
o All companies above $2,000 mn market Cap is considered as Largecap, below that but above $200 mn is considered as midcap, residual is small cap.
No comments:
Post a Comment