Mumbai: Corporate India is likely to see a double-digit growth in earnings for the quarter ended December 2017 due to low base during the corresponding quarter and pick up in sales on account of the festive season demand.
Sectors such as automobile, energy, consumer durables and private sector banks are likely to report better numbers while pharmaceuticals and telecom could see pressure. India Inc’s earnings season will kick-start in the coming week with IT major TCS scheduled to release its numbers on January 11 followed by Infosys on January 12.
“The net income of the Sensex constituents could see 15.2 per cent growth over the same period last year while companies in the Nifty basket are likely to see their net income grow by 15.4 per cent,” said Sanjeev Prasad, co-head and managing director of Kotak Securities.
According to him, firms in the automobile sector are likely to post higher growth in volumes and margins due to low base while cement and consumer product firms would see higher growth on account of cost saving initiatives, low base and GST-led savings. Non Bank Finance Companies (NBFCs) are also likely to see an improvement in growth due to festive demand pickup in auto and consumer durables.
Analysts at Motilal Oswal Securities said the factors that are likely to impact the financials of banks are tepid corporate loan growth, rising bond yields impacting treasury incomes, progress on stressed assets resolution under Insolvency and Bankruptcy Code and incremental provisioning on the second list of NCLT referred accounts. “There could be surprises in the case of existing restructured or strategic debt restructuring cases being referred to NCLT. We expect trading gains to correct sharply from previous quarters with increase in bond yields,” said Motilal Oswal Securities.
While pharmaceutical companies are likely to see a recovery in revenue growth due to low base, analysts at ICICI Securities believe that their operating margins would decline by 280 basis point due to continued pressure on US businesses and increased spend on research and development despite delay in key product launches.
“Increased competition and pricing pressure would continue to impact growth in US focused companies,” ICICI Securities said.
