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Nifty Companies Aggregate Profits Have Fallen 21% Even If You Ignore The Mammoth Loss By Sterlite

Nifty results continue to be HORRIBLE. I can’t even begin to tell you how bad the situation is, but see this today. Three Nifty companies announced results. And they were like this:

  • BHEL saw consolidated profits fall 59%
  • Tata Motors saw consolidated profits fall by 56%
  • Tech Mahindra saw consolidated profits fall by 39%

This is just serious suckage.

At this point, this is simply the worst quarter I’ve seen in recent times with respect to results and profit growth. 38 Nifty companies have announced results and this time, they’ve dropped aggregate profits by as much as 55%.

If you remove that big one timer by Sterlite (Vedanta), you still have a huge 21.1% drop in aggregate profits.

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This is not a scorecard you want to see from an economy that has quoted at 20 P/E for the last year or so.

Even RBI is starting to say the worst is yet to come. Whatever happens, don’t ignore your stop losses. And remember that in such a market, investing in a consistently profitable company is probably even more important than ever before.

  • Bhushan says:

    Are they postponing profit to future years using ‘good’ accounting practices? FM has promised reduced taxes every year for next 3-4 years. So, why not take more cost now and show more profit (at lower tax) later?

    • kumar says:

      i think it reduces by 1% each year, from 30% until it reaches 25%.
      if they are struggling for 1%, we have a bigger problem on hand. 🙂
      sell in may, and go away, is the general market principle, and true to that word, this may has been a bit more horrible than all mays that came before.

  • Anand Sancheti says:

    I think the line is apt here, there are lies, damned lies & there are statistics. If you are excluding vedanta & showing 21% decline in profit. Then why not remove tcs as well?? one time bonus of 2600crs bringing down profits. Why not consider tata steel one time non cash charge of 6500crs which led to losses of 5700crs. Why not look at tech mahindra & tata motors who took one time hits on the balance for one reason or another. When we look at real operating picture the situation is much different. A 50% drop in earnings would have caused havoc in the markets but markets arent blind. when we remove all those extraordinary hits i think there would be a rise in profits as well as in sales. cairn profits will also have to be looked in the same vein as Vedanta. overall earning have been ok, growth is sluggish & thats what the real problem is. Lets see when it all falls off.

    • Tata steel has a one time charge every couple years – so, not cutting it out either. Too many one timers in the rest – and Tech Mahindra has no one timers. Tata motors too. The hit is real and probably goingto continue…

  • dipaknair@hotmail.com says:

    It could even be normal stuff like paying vendors ahead of the cycle or pushing the order book to next quarter – why show growth when everyone else is slowing?

  • Several factors such as export slowdown (beyond our control), commodity price crash (a positive), black money squeeze (a positive), rural bust (a positive) etc. seem to have come converged this quarter. In addition, the government is an important buyer in sectors such as cement where procurement has been done through transparent mechanisms at dramatically low cost. Besides, many corporates seem to be just cleaning up the books, taking cover under the general pessimism. A clean-up is also happening in PSU bank balances sheets. On the whole, the results are not as bad as they seem at first sight – there is a silver lining in many of them.

  • Santanu De says:

    I know it will be more time-consuming for you, but if you can get a similar study done for BSE -200 companies (ex- Oil & Gas), it will be really helpful – particularly if you can extend the year-on-year analysis for Q4 as well as TTM.