Credit rating agency, Care Ratings in its latest report ‘Corporate Performance: Q3-FY18’ has said that India Inc witnessed much lower revenue growth in the third quarter of the current fiscal at 9.3% as against 17.7% in the previous year, on the back of factors like ongoing restocking process, adjustment to goods and services tax (GST) especially at the SME level, limited pick-up in demand and high base effect.
As per the report, on year-on-year basis, net profit growth of the companies was also lower at 24.6% in Q3 FY18 as against 25.3% in Q3 FY17. However, the rating agency noted that overall net profit margin improved to 8.3% from 7.3% during reported period. Besides, other income also reported impressive growth in Q3, but it contributed less than 3% in total income.
Care Ratings further said that overall performance of India Inc in Q3 is on recovery path and consolidated picture is lower in terms of profit, which means that Q3 has been able to overwhelm the lower performance in the first two quarters. The rating agency estimated that if such performance continued to recover or improved in Q4, the corporates would join upward trajectory next year.
The report is based on the profitability numbers of a sample of 1,567 companies over the last two years and it excluded banks as they have extreme performance due to the non-performing asset (NPA) issue and also finance companies due to the high interest cost component.