Despite business optimism and renewed vigour seen in the Indian economy, the January-March quarter of 2015 is expected to deliver disappointing results for the corporate sector, which will announce the profit and loss numbers from Thursday onwards starting with TCS.
This is primarily due to slowdown and lack of demand uptick, analysts and brokerages said. The fall in oil and commodity prices though had provided some relief.
‘Sluggish quarter’ According to a forecast by Edelweiss Financial, the fourth quarter (Q4) will also be a sluggish quarter with profit after tax and top line of companies tracked by it likely to contract five per cent and four per cent, respectively, year-on-year. “The last quarter (Q4) has been a perfect storm, resulting in broad-based slowdown. Fourth quarter witnessed deterioration of all demand levers in the economy, and, hence, poor earnings outlook,” Edelweiss said.
CRISIL Research said India Inc.’s revenue growth would slip to a 7-quarter low of 2.5 per cent on a year-on-year basis. “The weak performance of investment-linked sectors and low global commodity prices will more than offset the moderate growth anticipated in export-oriented sectors and consumer-driven sectors,” it said.
Earnings Outlook in numbers
| 1 | Only five sectors likely to report double-digit profit after tax growth. |
| 2 | Eight sectors likely to report degrowth to zero growth. |
| 3 | The fourth quarter has been a perfect storm resulting in broad-based slowdown. |
As per estimates by Prabhudas Lilladher, the fourth quarter performance is going to be more subdued than normal. The revenue growth is estimated at 2 per cent year-on-year whereas EBITDA margin (excluding BFSI) is expected to contract by 76 basis points, it said.
Motilal Oswal Securities Ltd. has predicted that the earnings will be disappointing again with only five sectors to witness double-digit growth. “Sales would de-grow 2 per cent, its first in 22 quarters, and EBITDA would grow in lower single digit (4 per cent). Collapse of global commodities and lack of revival in domestic demand will lead to another quarter of disappointing growth for corporate India,” it added.
Growth sectors The five sectors to witness double-digit PAT growth include telecom (54 per cent), private banks (16 per cent), consumer (15 per cent), NBFCs (10 per cent) and retail (10 per cent).
De-growth sectors Eight sectors would report PAT de-growth or zero growth including utilities (-1 per cent), oil (-4 per cent), PSU banks (-5 per cent), real estate (-14 per cent), cement (-14 per cent), capital goods (-17 per cent) and metals (-38 per cent).
However, some analysts have predicted better performance considering the fall in oil and commodity prices. “I am not pessimistic like others. Reduction in energy cost must have benefited all companies.
Cement and private banks (up 20 per cent) will perform better while engineering and construction firms will have steady to muted performance,” said Deven Choskey, Managing Director, KR Choksey Share and Securities Ltd.
