Big companies’ Q3 numbers show weak top-line growth

Many large companies have recorded a weak top-line growth during the third quarter that ended on 31 December 2009

While the Sensex is trading at a P/E of 20 and has hit a 21-month high, December quarter results should give the bulls a pause to think. In the first week, some 65 companies have declared results and the interesting news is that many of the large companies have recorded a weak top-line growth. While Infosys has declared excellent results, mid-size software company Mastek posted a dismal performance. Its sales in the December quarter were down by 25% over the same period last year. Usha Martin, which is planning to raise Rs500 crore through qualified institutional placements (QIPs) to reduce its debt, has suffered a top-line decline of 14%. Lacklustre performance came from Jindal Saw and also HDFC Bank. Jindal Saw’s revenues were down by 11% while HDFC Bank reported a surprising fall of 10% in revenues for the December quarter over the same period last year. Revenues of another bank, State Bank of Bikaner & Jaipur, also fell 5%. Slow demand on the global and domestic fronts has weighed on the top-line of Rallis India. Its sales declined by 3%. While analysts are gung-ho about the future growth of Infosys, its revenues too were down by 2%. VST Industries and Gruh Finance both posted a 1% decline in sales. Companies like Finolex Industries and Sintex Industries posted a meagre 2% growth in their top-line in the December quarter over the same period last year. Axis Bank’s growth too was not too stellar—just 4%. Infomedia 18 which launched Forbes magazine last year, posted a decline of 38% in sales in the December quarter over the same period last year.

Declining sales are a clear indication of weak demand, which raises doubts about the economic recovery. Across all industries, companies have recorded weak sales—a disturbing fact, indicating that growth in the overall economy is yet to gain momentum.

 

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