June quarterly results recap

September results season has begun now with companies posting good recovery in numbers.

However, to put it in perspective, let's recap June's quarterly earnings of Nifty 50 companies and compare it with their earnings last year’s same quarter to get an idea of how much effect the pandemic and GDP had on the June quarter.

According to Ministry of Statistics & Programme Implementation, Indian GDP at the current prices in the year Q1 2020-21 is estimated to be at Rs 38.08 lakh crore, as against Rs 49.18 lakh crore in Q1 2019-20, showing a contraction of 22.6 per cent. The total net profit of all the 50 companies combined saw a contraction of more than the GDP figures. The total net profit for NIFTY50 constituents for Q1FY21 stood at Rs 48,328 crore as against Rs 90,754 crore in Q1FY20, showing a decrease of 47 per cent. However, even with the pandemic, lockdowns, and an overall economic slowdown, 15 companies in NIFTY 50 had reported a YoY increase in the net profits in June this year.

These observations bring to light a few interesting points. Firstly, the earnings of the companies can be significantly different from the GDP trends in the short run. However, one can still find a few stocks that show growth even with economic contraction.