What’s Happening?
The rise in input costs, inflation and the war in Europe has escalated tensions for companies worldwide. Since most countries depend on each other for import and export of goods and services, a slight geopolitical crisis causes billions of dollars. However, this time things have been looking up for India. So far, companies have maintained double-digit growth in the top line for Q4FY22.
According to the Economic Times early bird analysis of results, a standard sample of 86 companies that have declared results in the past 13 quarters have reported revenue of 14.5% year-on-year (YoY). 11 companies under this sample have reported 51.5% of aggregate revenue. Many brokerages expected shrinkage in the margins, but that hasn’t happened. Companies in sectors like banking, IT and oil & gas may likely report impressive top-line growth.
Should This Concern You?
By hiking the retail price, companies are passing on the inflation in their input costs to the customers. This helps companies to cover their costs and report better earnings. For instance, FMCG companies have already taken calibrated price hikes across categories. As more companies announce their earnings, it will be visible which ones pass on their input costs and which ones don’t. The ones that don’t will make more losses in the near term.
What Lies Ahead?
A more evident growth trend can only emerge once the results season is over. Until now, companies have announced decent earnings and double-digit revenue growth.
