Raising concerns over the disappointing second quarter earnings, credit rating agency, Care Ratings in its latest report has said that a series of factors like adjustment to GST regime, lower industrial growth and limited pickup in demand have hit the companies’ Q2 performance and have led to a decline of about 1.5% in net profit of Q2 FY18 over a growth of 13.2% in the corresponding period last year.
As per the report titled ‘Corporate Performance: Q2-FY18’, GST regime and low industrial growth have also slowed down net sales growth of the companies to 7% in Q2 FY18, against a growth of 10% in Q2 FY17. The report further noted that the overall performance was skewed due to the performance of banks, oil companies, IT and finance which are guided by other exogenous factors, while excluding these sectors the performance of industry depicts similar trend in Q2 FY18.
Care Ratings further reported that the industry’s net profit excluding banks, IT, oil & refineries, and finance sectors, declined by 4.4% in Q2, as against a growth rate of 15.4% in the corresponding period last year, while net sales grew at a much slower rate of 4.7% in Q2 FY18, as against growth rate of 11.8% in Q2 FY17.