The last quarter of a challenging and pandemic-hit fiscal FY21 has been absolutely dazzling for the corporate sector having registered double-digit growth in the top-line and more than 6-times jump in net profits (YoY), CARE Ratings has said in its latest report.
"Although one can argue that the year-on-year performance is relatively skewed due to a low-base but importantly, there has been a sequential improvement of 9.6% in net sales and almost 30% growth in net profits in Q4-FY21. Cumulatively, this shows a promising bounce-back for Corporate India from the testing first half of this fiscal which was marred by nation-wide lockdowns during April and May'2020 and gradual relaxations in the subsequent couple of months. Q3 of FY21 was the period when the recovery process for the corporates commenced amidst pent-up demand supported by the rural economy and re-orientation of precautionary savings to meet consumption and discretionary spending," the report said.
According to CARE Ratings, the revival has been further strengthened and the annual net sales number for FY21 is only 1.5% lower than the FY20 number.
"Barring the impressive top-line and bottom-line numbers, a cardinal point about this quarter is that there has been a broad-based increase in the operating expenses of the companies on the back of a global rally in commodity prices and ramping up of production activities.
This is unlike the first two quarters (Q1 and Q2 - FY21) where the corporates had resorted to various cost rationalisation measures to manage their profit margins. The ensuing study assesses the corporate performance for Q4 FY21 based on sample of 1,511 companies, sourced from Ace equity. The study further delves into the industry-wise performance for 65 select industries while attributing reasons for certain specific industries.," CARE Ratings has noted.
According to the rating agency, there has been an uneven recovery in the net sales across various industries with some less impacted industries witnessing a positive growth in net sales from Q2 itself while others seeing a more staggered recovery from Q3 and Q4 too.