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Motilal Oswal Report
The Reserve Bank of India released its Q2 FY22 financials of listed non-government, non-financial (NGNF) companies. Given below are the few macro lessons from the following:
Net sales for the listed non-government, non-financial corporate sector (comprising of ~2,700 companies) grew 32% YoY in Q2 FY21, with aggregate sales at a record high of Rs 11.6 trillion in the quarter. Total expenditure grew 36% YoY in Q2 FY22, led by a 46%/38% growth in ‘raw materials’/‘power and fuel’ costs.
Using data for the past decade (since Q3 FY12), we find that corporate sales are very strongly correlated with headline Wholesale Price Index measure of inflation. Both sales growth and headline WPI inflation have been at extreme levels during the past few quarters.
With lower debt and interest rates, the interest coverage ratio improved to a decade high (this data is available only since FY12) of 5.3 times in Q2 FY22 vis-a-vis 3.7 times a year ago and 3.4 times in FY20.
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