A Bad March Quarter for India Inc

Source: CNBC TV18 Analysis, CMIE 

Clearly materials costs and interest expenses is hitting India Inc. hard. Costs are up 32% and interest expenses up 43% reflect current environment. We continue to remain in high interest rates scenario. There are no doubts on this front at least. And these elements will continue into the coming quarters. 

The worst hit companies are the ones which have huge capex plans. For one, their capex now would get delayed. Next, their interest costs would bundle up. This would further add to the pain in the bottom line.  

The only argument contradicting the above viewpoint is the advance taxes paid by India Inc. Some of the big cap companies have paid advance tax in excess of 50% their previous estimates. Sure this is a cheer point. But, it could also be a big misleading indicator. We could perhaps establish this fact once the report card is public. In the past we have seen, India Inc. paying aggressively in the first instalment. 

The big ticket numbers start next week. Till then we live with the likes of technical chartists who predict sell-offs and relief rallies every other day. I for one am a fundamentalist. And so is Warren Buffett. 

Disclosure: The author is not permitted to trade and/or invest into the equity market directly or indirectly, apart from investing (long only) in mutual fund products. His equity exposure is only to the extent of ESOPs granted by the employer.