India has the highest gross domestic product growth of any large economy; its chronic inflation problem seems under control and it has a relatively business-friendly prime minister. But its companies’ profits remain utterly unimpressive.
The latest round of quarterly results showed once again that whatever is happening with top-line GDP expansion isn’t trickling down to the bottom line.
The profit after tax at the 30 companies that make up the benchmark Sensex rose only 2.7% from a year earlier. That is better than the 9% decline a year ago but a slowdown compared to the previous quarter.
For the full fiscal year ended March, Sensex company profit fell 1.6%–their worst performance in seven years. Official data showed last week that the economy grew 7.6% in the same period.
Profits were pummeled as Indian government-owned banks reported losses as they set aside huge amounts of money for bad loans.
Source: Indian Firms Continue to Flounder in the Face of Fantastic Fundamentals – India Real Time – WSJ
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