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BT500: Harm and Hope

BT500: Harm and Hope

What is already visible in India Inc.'s health are the effects of 18 quarters of persistent slowdown. After all, while Coronavirus was unanticipated, the slowdown preceding it was not

Rajeev Dubey, Editor, Business Today Rajeev Dubey, Editor, Business Today

BT500 is Business Today's longest running annual project. Its uninterrupted run since 1993 has been witness to every twist and turn of the Indian economy and every rise and fall in India Inc.

But it hasn't ever seen a year like the one that is unfolding in front of our eyes now. A near three-month shutdown of the economy due to the Coronavirus-induced lockdown, widespread disruption in manufacturing, services, supply chains and logistics - the march of the migrants - and innumerable job losses, the effects of which will be visible in corporate India's performance in the coming quarters.

But what is already visible in India Inc.'s health are the effects of 18 quarters of persistent slowdown. After all, while Coronavirus was unanticipated, the slowdown preceding it was not. That is why, the combined net profit of the BT500 universe has fallen sharply by 21 per cent despite a meagre 1.2 per cent growth in the topline. Both numbers representing a new low in corporate performance in the past four years.

But just as the lockdown is opening, there appears a ray of hope. E-way bill generation - which represents movement of goods worth Rs 50,000 or higher - has hit an all-time high of 6.41 crore in October. Power demand - representing restarting of industrial activity - which had fallen to 85 billion units in April has risen to 110 billion units in October. The index of the eight core industries which had fallen to -37.9 per cent in April due to the lockdown, is still negative, but barely. At 0.8 per cent in September, it is set to get back to positive territory. Also, with companies gradually raising output amid rising demand, the PMI has hit a decadal high of 58.9. Unemployment rate is lower - down from the peak of 23.52 per cent in April to just 6.98 per cent. GST collections have exceeded the Rs 1 lakh crore mark for the first time in eight months.

There's a catch, though. Macro indicators continue to be a cause of worry. Private investment is showing no signs of pick-up as value of new project announcements is one-fourth of long-term average, exports are at a seven-year low and with tax collections falling, both states and Centre are struggling to meet public expenditure projections. Private consumption which had ground to a halt is showing signs of life - but only in select pockets. India Inc. will bear the full impact of the good, the bad and the ugly in the current financial year.

But BT500 has already thrown some interesting trends. At the top, for years it's been a constant battle between Reliance Industries and TCS. This year, Reliance has taken its widest lead over TCS - Rs 2.6 lakh crore, thanks to new investments in Jio Platforms and Reliance Retail. Corporate India's profits may have fallen but expense management improved. Covid uncertainties prompted investors to invest in large and established companies as safe havens. As a result, Top 211 firms have seen their market cap climb 21.7 per cent while 280 of the BT500 firms have seen a fall in market cap.

And freshly listed BFSI firms in small finance banking, pure play credit cards, insurance and mutual fund are an instant hit in the stock markets. SBI Cards already has a market cap equivalent to half of parent State Bank of India. Read these fascinating stories in our action-packed coverage in the coming pages.