The March quarter results of early bird companies send out all the good vibes about the growth momentum. But some analysts say it’s too early to pop the bubbly yet.

After a slow start, India Inc seems to be ending the financial year 2009-10 with robust growth, going by the initial set of numbers of 116 companies – excluding banking and non-banking financial companies (NBFCs). On a year-on-year (YoY) basis, net sales of these 116 companies grew 23.51 per cent, while net profit rose by about 29.52 per cent.

On a quarter-on-quarter (QoQ) basis, net sales grew a modest 4.38 per cent and net profit 14.10 per cent. Of the 116 companies that have announced results so far — including Hero Hondo, TVS Motors, Ambuja Cement, TCS, HCL

Technologies and Blue Dart Express — as many as 45 have reported over 30 per cent YoY profit growth. Of them, 18 posted more than 100 per cent YoY profit growth while 36 others posted over 50 per cent jump in net profit. Significantly, 52 companies — including Dunlop, Rana Sugars, Essar Oil and Strides Arcolab — have shown negative profit growth on a YoY basis. “Till now results are either in line with expectations or ahead of expectations,” said Tarun Sisodia, director and head of research at Anand Rathi Financials.

He, however, added that the rise in metal prices in the last quarter helped companies in this sector post better numbers. “Commodity prices have gone up in the recent times. We should look at the numbers, excluding metals,” Sisodia said.

According to Sailav Kaji, director of institutional equities and chief strategist at Fiduciary-Euromax Capital Markets, the earnings numbers showed that things are looking up. In the IT sector, where all major companies have announced results, the numbers have been ‘better than expected’ despite an appreciating rupee. During the quarter ended on March 31, the domestic currency rose 3.4 per cent versus the US dollar.

TCS, which has reported 50.1 per cent YoY growth in net profit in the last quarter, and other IT companies expect to see the momentum pick up further pace, going forward.

“However, the appreciation of the rupee could be a significant headwind for TCS,” Vihang Naik, research analyst for IT services at institutional equity research firm MF Global Sify Securities, said in a note.

Among leading two-wheeler firms, Hero Honda and TVS Motors have reported healthy YoY growth, though TVS Motors showed a negative QoQ growth at 13.77 per cent. On a YoY basis, Hero Honda’s profit grew 48.89 per cent while net sales rose 19.95 per cent. In case of TVS Motors, profit grew 38.79 per cent on a YoY basis while sales were up 33.68 per cent.

Commenting on the numbers of TVS Motors, India Infoline said in a note: “Operating profit per vehicle surged 139 per cent YoY for the company driven by a 3.9 per cent drop in raw material cost. Raw material cost as a percentage of sales was down 642 basis points due to a sharp fall in commodity prices on a YoY basis. Sequentially too, raw material cost as a percentage of sales fell 183 basis points, possibly due to effective long-term contract for raw materials.”

Two leading cement makers, both promoted by Swiss major Holcim – ACC and Ambuja Cement – announ-ced results, showing a contrasting picture. ACC’s net profit on a QoQ basis grew 44.32 per cent, while Ambuja Cement’s profit zoomed 91.63 per cent in the same period. On a YoY basis, ACC’s net profit showed a flat growth at 0.09 per cent, while Ambuja Cement saw its net profit shoot up 38.36 per cent in the same period.

For Ambuja Cement, Ebidta (earnings before interest, depreciation, tax and amortisation) grew 19.1 per cent YoY on account of lower clinker purchases (-9.3 per cent YoY, as the company commissioned its 4.4 mtpa clinker capacity) and lower power and fuel costs (-10.9 per cent as it benefited from low cost coal inventory, higher captive power generation and better efficiencies), Ajit Motwani, an analyst at Emkay Global, pointed out.

Ebidta margins expanded 296 basis points on a YoY basis to 31.3 per cent. “We see Ambuja Cement’s Ebidta cross the 30 per cent mark after eight quarters,” Motwani wrote in a note.

As for United Spirits, bracketed in the FMCG sector, net profit was flat despite a healthy 37.9 per cent YoY growth in net sales. Net profit was flat at Rs 56.9 crore YoY, following higher interest cost on account of refinancing dollar-denominated debt raised for the White & Mackey (W&M) acquisition, Edelweiss analysts Abneesh Roy and Nitin Mathur, wrote in a note. They said net sales at Rs 1,252 crore were above expectations.

Another leading FMCG player, Nestle India, reported flat YoY profit growth. Revenues increased 16.9 per cent YoY to Rs 1,479 crore, mainly due to volume growth. Domestic sales increased 16.7 per cent while exports rose partially at 20.40 per cent, offset by adverse currency movements, the Edelweiss analysts pointed out.

But are these early results a fair indication of the growth momentum, or is it too early to pop the bubbly?

“The results have been fairly good so far,” says Avinash Gupta, assistant vice-president of research (equity) at Bonanza Portfolio. He, however, hastened to add: “Normally, with the exception of IT companies, good results come in first. So we need to wait for a larger set of companies and sectors to arrive at a concrete view.”

Sailav Kaji of Fiduciary-Euromax said, “The earnings numbers from a whole set of companies are yet to come out. For instance, engineering and capital goods companies such as Larsen & Toubro, Bhel and the metals pack, which includes Tata Steel, SAIL and Hindalco, are yet to announce results. It’s too early to take a view.”