The Reserve Bank of India (RBI) in its latest report has showed that demand conditions in the manufacturing sector returned to the recovery mode with a softer contraction of 4.3 per cent (Y-o-Y) in the second quarter of this fiscal (Q2FY21) in terms of nominal sales. It had sunk 41.1 per cent in the previous quarter that was hit by countrywide lockdowns due to COVID-19. The recovery was led by iron and steel, food products, cement, automobile and pharmaceuticals companies, showed the data on the performance of the private corporate sector during the second quarter of 2020-21.
The Central Bank said the data has been drawn from abridged quarterly financial results of 2,637 listed non-government non-financial (NGNF) companies. Manufacturing companies reported sales of Rs 5,99,479 crore in the second quarter, compared to Rs 3,97,233 crore in April-June of FY 2020-21. Nominal sales of non-IT services sector also registered lower contraction of 14.5 per cent (Y-o-Y) led by expansion in sales of telecommunication and real estate companies. Sales growth of IT sector companies remained steady at 3.6 per cent (Y-o-Y) in Q2 FY 2020-21.
As per the data, sales of non-IT firms and IT firms during the second quarter stood at Rs 80,842 crore and Rs 1,01,353 crore, respectively. Operating profits of manufacturing companies increased on the back of savings in expenditure; operating profits of services (both IT and non-IT) companies also increased in Q2:2020-21. On expenditure, it said input cost pressure from raw materials remained subdued for manufacturing sector in the July-September quarter of the fiscal.
According to the data, with rise in profits, interest coverage ratio (ICR) of manufacturing companies improved to 4.6 in the second quarter of 2020-21 from 2.4 in the previous three-month period. The ICR of non-IT services companies remained below one. Also, profit margins improved across manufacturing and services companies on account of rise in profit from cost saving.
MoneyWorks4Me is a SEBI-registered Investment Adviser (IA) dedicated to helping investors build long-term wealth through transparent, research-driven, conflict-free guidance. Founded in 2008, we started our journey as a Research Analyst (RA), providing deep fundamental analysis, intrinsic value insights, and long-term investing frameworks for Indian equities. In 2017, we transitioned to a full-fledged SEBI-registered Investment Adviser, strengthening our commitment to acting as a fiduciary—always putting the investor’s interest first.
To become India’s most trusted, research-powered fiduciary advisory platform—where every investor, regardless of experience, can make calm, confident, and well-reasoned investment decisions.
MoneyWorks4Me ensures this through: