The numbers posted by companies in the first quarter of 2018-19 were good and most expected a similar showing in the second quarter as well. However, the second quarter has turned out to be a mixed bag. While aggregate revenue grew 20% y-o-y and 5% q-o-q, the aggregate net profit growth remained muted at 3% y-o-y. If one compares on q-o-q basis, the aggregate net profit fell by 3%.Net profit growth has been muted mainly because the negative impact of high commodity prices has started seeping in. Though commodity prices helped sectors like steel, mining and minerals, a major segment that faced margin pressure due to it was auto and auto component. The negative impact of high commodity prices was also visible in sectors like tyres, dry cells, shipping, etc. However, commodity prices have started reversing. The impact of a spike in oil prices was more dramatic. While upstream oil companies reported decent growth, the aggregate was pulled down by PSU oil marketing companies. Since transport and logistics companies could not pass on the entire cost burden to consumers, they too took a major beating due to high oil prices and this explains why aviation players like Jet Airways reported a loss of Rs.1,297 crore. Other industries like paints that depend on oil for raw material also took a hit. However, the recent correction in international crude oil price should benefit them.

(Economic Times)