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Top 2 Sectors Aiding India Inc’s Double-Digit Growth in Q3

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Introduction

The third quarter results are pivotal indicators of the financial health of companies. With 215 companies declaring October-December results, the double-digit growth is a positive signal for the market. It shows the resilience and adaptability of businesses in a dynamic economic landscape.

The third quarter results season has commenced, revealing a noteworthy year-on-year growth of 11.2% in revenue and 14.2% in net profit for the sample companies. However, these figures signify a slight deceleration from the previous quarter’s outstanding performance, where revenue and profit surged by 12.1% and 24.5%, respectively. [Source: Economic Times]

Analysis of Q3 Results

Delving into the numbers, the standout performer remains the banking and finance sector, propelling the overall growth. Banks’ aggregate revenue and profit skyrocketed by an impressive 50.5% and 39%, respectively. This surge is a testament to the robust lending activities that have driven revenue and net profit.

Comparing these figures with the preceding quarter’s exceptional performance adds depth to the analysis. The 12.1% and 24.5% growth rates in revenue and profit during July-September set a high bar, making the slightly lower figures in Q3 still commendable.

Performance of Banking and Finance Companies

Though flourishing, the banking and finance landscape is not without its challenges; lenders face pressure on the margin front, with the net interest margin (NIM) squeezed as deposit rates rise faster than lending rates. This nuanced insight adds context to the overall scenario, revealing the intricacies influencing the sector’s performance.

A different narrative unfolds when we exclude banks and finance companies from the sample. The moderate growth of 4.5% and 6.8% in revenue and profit for the December quarter, excluding these entities, highlights their substantial contribution to the overall positive figures.

Operating Margin Dynamics

The tug-of-war between deposit and lending rates was pivotal in shaping the operating margins. The NIM squeeze resulted in a 70 basis points decline in the overall sample’s operating margin to 20.9% in the latest December quarter. However, excluding lenders revealed a contrasting improvement, with the operating margin seeing a 60 basis points increase, reaching 17.8%.

Influence of Reliance Industries (RIL)

Reliance Industries (RIL), as the country’s largest company, significantly influenced the overall performance, contributing 33% and 19.9% to the total sample revenue and net profit, respectively. RIL’s revenue from operations grew by 3.6%, and net profit rose by 10.3%, showcasing its substantial impact on the sample’s growth, which improved to over 15% when excluding RIL.

Analyst Predictions and Sectoral Growth

Anticipated sectors driving overall earnings growth include domestic cyclicals, with automobiles and BFSI projected to post 35% and 17% YoY growth, respectively. As more companies from various sectors declare their quarterly performances in the coming weeks, the trend in India In.’s quarterly results will gain clarity. This evolving picture will contribute significantly to understanding the broader market trends.

In conclusion, the third quarter results showcase mixed triumphs and challenges. While banking and finance lead the growth charge, other sectors face moderation. The tussle between deposit and lending rates adds an interesting layer to the financial narrative, underscoring the complexity of economic dynamics.

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I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.

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