The growth rate of sales for private non-financial companies in the second quarter ended September 30 decelerated sharply over the year ago period, almost halving compared to both the same quarter last year and the preceding quarter ended June 30. Moreover, profit (both operating and net profit) growth rate fell sequentially in the second quarter, as per corporate data analysed by RBI.
The data shows how the non-financial side of corporate sector is still struggling to leave behind the economic slowdown.
RBI analysis showed the aggregate sales growth of private non-financial firms rose 4.2 per cent to Rs 8.1 lakh crore over the year-ago period. This was much slower than 7.1 per cent growth notched in the first quarter and 6.4 per cent rise in top-line in Q2 FY14.
This was due to decline in sales growth rate of manufacturing sector as well as IT services space. On the positive side non-IT services space notched up better sales but given the size of manufacturing sector the overall growth rate slowed down.
Overall sales growth of the companies with annualised sales more than Rs 500 crore moderated while sales growth of companies with annualised sales less than Rs 500 crore continued to contract, as per RBI analysis. This means medium-large firms have seen sales growth decelerate while small firms continue to see decline in top-line.
Overall expenditure growth declined due to lower growth in the raw material expenses, and growth in staff cost also declined.
However, this did not lead to any significant rise in profits.
EBITDA (earnings before interest, tax, depreciation and amortisation) growth slowed down in Q2 as compared with Q1 but it rose compared to Q2 of last year at the aggregate level as also for the manufacturing sector. It increased distinctly for the non-IT services sectors and declined very sharply for the IT sector. Pricing power, as measured by EBITDA margin declined in Q2 as compared to Q1 of FY15.
EBITDA grew 8.3 per cent last quarter as against 16.5 per cent rise in Q1.
Year-on-year growth in interest expenses dropped in Q2 but interest coverage ratio, which captures ability to service interest outgo, remained at similar levels as observed in the previous quarter.
Net profit growth increased noticeably for the services (other than IT) sector due to better net profits reported by few companies from the transport, storage and communications industry.
Net profit margin remained at similar levels at the aggregate level while net margins improved in the services (IT and other than-IT) sector. Overall net profit rose 25.6 per cent to Rs 53,700 crore in Q2.
RBI analysis tracked performance of 2,863 private non-finance companies.