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Motilal Oswal Report
The Reserve Bank of India recently released its Q3 FY22 financials of listed non-government, non-financial companies. A few macro lessons from the Q3 FY22 financials are furnished below:
Net sales for the listed non-government, non-financial corporate sector (comprising ~2,700 companies) grew 25% YoY in Q3 FY22, with aggregate sales at a fresh high of Rs 12.4 trillion in the quarter. Total expenditure grew 29% YoY in Q3 FY22, led by a 37%/58% growth in ‘raw materials'/‘power and fuel' costs, respectively.
Using data for the past decade (since Q3 FY12), we find that corporate sales are highly correlated with headline wholesale price index measure of inflation. Both sales growth and headline WPI inflation have been at extremely high levels during the past few quarters.
With lower debt and interest rates, the interest coverage ratio was broadly unchanged at a decade high (this data is available only since FY12) of 5.2 times in Q3 FY22 vis-a-vis 4.5 times a year ago and 3.4 times in FY20.
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