There is some respite for our policy makers as India Inc Q1 (April-June 2020), profit’s decline rates are lower than, what was being speculated earlier, during COVID-19 lockdown. As most analysts had estimated a 40-50 per cent year-on-year decline in aggregate net profit and a 30-40 percent fall in revenue, the actual results are somehow encouraging. An analysis by Motilal Oswal Financial Services (MOFSL) indicates towards a much shallower dip.
The 35 Nifty50 companies that had released results as of August 10, 2020 posted better-than-estimated figures — aggregate net profit declining by 16.3 per cent year-on-year.
The aggregate net profit, excluding the banking sector fell 22.6 percent —steep, but only half as bad as expected. Revenue numbers came in closer to estimates, falling 27.7 per cent overall and 28.4 percent excluding the financial sector. The shallower-than-expected fall in earnings is likely due to two factors : heavy cost cutting by panicked companies, and a better-than-expected revival in demand once the government began the unlocking the economy beginning late May.
