Page 15 - CII Artha Magazine 2022

Domestic Trends

Corporate 60.0 Broad Trends in Corporate Performance 18.0 External risks chains and led to shortages
and delays in critical inputs
of raw materials. These
keep
could be seen as a drag on
54.4
Performance: 40.0 8.4 1.6 9.1 23.5 47.4 40.3 16.0 corporate the corporate profitability in
the fourth quarter of FY22.
14.0
However, some sectors are
12.0
20.0
outlook mixed
10.0
likely to gain from the high
8.0
Slowdown, -20.0 Q4'FY19 Q1'FY20 -5.1 Q2'FY20 -3.1 Q3'FY20 -10.7 Q4'FY20 -31.4 Q1'FY21 -0.6 Q2'FY21 Q3'FY21 Q4'FY21 Q1'FY22 Q2'FY22 Q3'FY22 6.0 The spectre of the which is likely to show up
global commodity prices
0.0
4.0
positively on their PAT
2.0
Russia-Ukraine war has
-40.0
margins. These factors will
0.0
further raised commodity
keep corporate performance
prices, elevated logistics and
mixed for the fourth quarter
Revival Sectoral Net Sales (% Y-o-Y) PAT margin (%, rs) also disrupted global supply of FY22.
transportation costs. It has
Source: CII Research analysis using Prowess data
cut into their profit margins.
and Risks Q2 AND Q3 OF FY22 FY21 (period of pandemic Trends: A mix On the other hand, mines and
metals recorded high profits
at the back of rising
commodity prices viz metals.
of good, bad
and nation-wide lockdowns).
SAW STEADY
decline in y-o-y growth in net
CORPORATE Corporate profitability too and possibly Consumer durables showed a
remained strong as PAT
sales, while their profitability
PERFORMANCE margin almost doubled from marginally rose however,
DESPITE CONSTRAINTS the pre-pandemic levels. PAT ugly sectors like automobiles,
margin (per cent) rose from
15.7 per cent in Q1 to 16.3 construction and real estate,
construction material and
Pre-Pandemic blues Pandemic strikes revival, both in terms of net per cent in Q2 of FY22. This The sectoral performance for textiles saw a decline in both
was reflective of
y-o-y net sales and PAT
E ven before the pandemic Poor corporate performance sales and PAT margins. Also, improvements in capacity Q3 of FY22 has been mixed, margin (per cent). This
utilisation and cost
both in terms of net sales and
signified a broader slowdown
continued into the Q1 of
this was broad-based across
struck, net sales of
corporates were declining on FY21 as the pandemic struck. sectors. In part this was optimisation. profitability. in the economy with declining
a year-on-year (y-o-y) basis. Lockdowns were imposed and driven by a low base effect. Sectors like FMCG and consumer demand cutting
Using the data extracted from this impeded the But easing of lockdown Emerging signs of cost power have seen their net revenues and high input &
CMIE’s Prowess database , it manufacturing and restrictions and revival of pressures sales go up, however rising logistics costs eating into
can be seen that net sales of service-based activities. As economic activity also played raw material and input costs profits.
the corporate sector had people were forced indoors, a major role. Pent up demand However, the third quarter of
contracted on a y-o-y basis discretionary spending fell from the rural areas, running FY22 saw the PAT margin
through Q2, Q3 and Q4 of considerably. Global trade down of precautionary (per cent) moderating to 14.5
FY20. PAT margin (per cent), activities slowed down, hurting savings made during the per cent from 16.3 per cent Snapshot of sectoral performance in Q3FY22
too, declined from 15.2 per both exports and imports of pandemic, low cost of capital in the previous quarter. This
cent in Q2 to 9.6 per cent in raw materials. Only pharma as average Marginal Cost of showed that the signs of 25
Q4 of FY20. This was despite sector recorded a y-o-y Lending Rate (MCLR) came strain seem to have emerged. IT & ITES Metals and Mining
the corporate tax rate cut expansion in net sales in this down by 51 basis points from Brent crude price rose by 79 20 FMCG
reducing the tax burden of quarter. In order to minimise July 2020 to June 2021 – all per cent on y-o-y basis in Pharmaceuticals Total Q2FY’22
corporates. This slowdown losses, corporates resorted to supported good corporate Q3FY22, while steel prices 15 Total Q1FY’22
was across the board, except cost rationalisation and performance. rose by 48 per cent and PAT Margin ( per cent) Construction materials Textiles Total Q3FY’22
for power sector which increased efficiency, which aluminium by 41 per cent. 10 Chemicals
Capital goods
maintained steady growth in pulled up the PAT margin (per Q2 and Q3 of FY22 saw Even gas and coking coal 5 Consumer durables
net sales even though its cent) from 9.6 in Q4FY20 to steady corporate prices shot up multi-fold. Automotive Real estate & Construction
y-o-y profitability declined. 10.7 per cent in Q1FY21. performance despite These high raw material and 0 -20 0 20 40 60
This disappointing constraints. Net sales shot up input costs ultimately Net Sales (per cent Y-o-Y)
performance was indicative of significantly from the previous squeezed corporate
overall slowdown in the The Revival quarter, even though the y-o-y profitability of manufacturers,
Source: CII Research analysis using Prowess data
economy and weak consumer Q2 of FY21 to Q1 of FY22 growth showed a decline due despite sales growth in some Note: Power sector was an outlier with Net Sales (Y-o-Y) of 268.6% and PAT Margin (%) of 11.9%
demand. was marked by corporate the low base effect from Q1 sectors.
14 ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY 15
QUARTERLY JOURNAL OF ECONOMICS
QUARTERLY JOURNAL OF ECONOMICS
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