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IT sector sustains its high growth momentum

Net profit of the manufacturing, and the IT sector moderated in 2022-23, latest data released by the Reserve Bank of India showed.

The net profit margin of the manufacturing sector declined to 8.7 per cent in 2022-23, against 10.6 per cent in 2021-22.

Similarly, the net profit margin of IT companies also witnessed moderation, decreasing to 16.9 per cent in 2022-23 from 19.9 per cent in 2021-22, a RBI report titled Performance of Private Corporate Business Sector during 2022-23 showed.

Meanwhile, non-IT services companies managed to maintain stable operating profit margins, although they continued to face net losses. The net loss margin for non-IT services companies stood at 2.4 per cent in 2022-23, showing a slight improvement compared to the previous year’s net loss margin of 6.7 per cent.

The data showed that non-financial listed private companies experienced a sales growth of 19.8 percent year-on-year, with the manufacturing sector leading the way with an 18.0 percent growth rate. Notably, the automotive, petroleum, and chemical industries played a significant role in driving this growth.

The information technology (IT) sector sustained its high growth momentum, while the performance of non-IT services companies improved further during the same period. This improvement was primarily driven by robust growth in the trade and transport sector.

With improved demand conditions and corresponding sales growth, manufacturing companies witnessed an increase in their expenses on raw materials and employees. However, the interest outgo for all major sectors also increased during the year.

The interest coverage ratio (ICR) of manufacturing companies moderated to 7.3 in 2022-23 from 8.4 in the previous fiscal year due to the rise in interest expenses. However, the ICR for the non-IT services sector crossed unity, indicating a viable level of coverage, with all subsectors except the telecom group showing satisfactory ICR levels. Business Standard

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