India Inc Q2 Profit Growth Bounces into Double Digits
India’s listed companies (ex-banking/financials) posted a 12% year-on-year (YoY) net profit growth in Q2 FY24, marking a strong rebound from earlier quarters. This revival was fueled by stable input costs, resilient domestic demand, and operational efficiencies.
Key Drivers of Double-Digit Profit Growth
1. Commodity Price Cooling Boosts Margins
- Sectors like metals, chemicals, and cement benefited from lower global commodity prices.
- Example: Tata Steel’s profitability improved due to declining coking coal costs.
2. Domestic Demand Fuels Consumer Sectors
- Automobile giants (Maruti Suzuki, Hero MotoCorp) and FMCG majors (HUL, ITC) saw strong festive-season demand.
- Urban consumption offset rural sluggishness caused by uneven monsoons.
3. IT & Pharma: Stability Amid Challenges
- IT firms (TCS, Infosys) optimized costs amid global slowdowns.
- Pharma companies gained from export growth and cheaper raw materials.
4. Infrastructure & Capex Revival
- Govt spending and private capex drove orders for L&T and construction firms.
Risks to Monitor
- Global headwinds: Slowdown in Western economies may hit exports.
- Rural recovery: Pending due to inflation and monsoon variability.
- Interest rates: High borrowing costs could pressure leveraged sectors.
Q3 FY24 Outlook: Cautious Optimism
- Festive/wedding demand may further lift consumer spending.
- RBI’s rate pause and easing inflation could sustain earnings momentum.
Market Response
Benchmark indices (Nifty50, Sensex) rose ~10% in 6 months, reflecting investor confidence.
Bottom Line
India Inc’s Q2 rebound underscores economic resilience. With government initiatives like Make in India, the double-digit profit trend may continue, but global volatility warrants vigilance.
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