The study is based on 237 cos tracked by 11 research firms, including Angel Broking, BNP India, CLSA India, Edelweiss Research.
Six domestic and five foreign equity research firms expect corporate India to post decline in sales and profit in the first quarter ended June 2009. The net sales are expected to decline around 10 per cent, while net profit is projected to decline around 7 per cent. The operating margins are expected to improve by around 170 basis points, thanks to cost adjustment, decline in raw material prices and utilisation of finished goods inventory.
The study is based on 237 companies tracked by 11 research firms, including Angel Broking, BNP India, CLSA India, Edelweiss Research, KR Choksey Research, Macquarie Research, Merrill Lynch, Morgan Stanley, Motilal Oswal Securities, Prabhudas Lilladher and Religare Research. These research firms analyse 70-130 firms individually with common sample of around 60.
Analysis show automobiles, including two-wheelers and utility vehicles, cement, capital goods, construction, pharmaceuticals, power, sugar and telecom sectors expected to drive revenue growth while, automobile- commercial vehicles, auto ancillaries, metal-ferrous and non-ferrous, oil marketing, refineries and realty sectors expected to drag down the net sales of the corporate sector.
The handsome growth in profit expected to come from the makers of two-wheelers and utility vehicles and oil marketing companies. The sectors such as cement, capital goods, fast moving consumer goods, pharmaceuticals, power and sugar are expected to post double digit growth in net profit. Auto ancillaries, construction, hotels, metals, media-entertainment and print, oil and gas, realty and refineries expected to post 20-50 per cent decline in net profit.
The software services companies expected to post the weakest quarter on falling dollar revenue coupled with appreciation in rupee around six per cent. The average revenue growth for software services firms expected to be around 5-6 per cent while rise in profit likely to around 3 per cent. Though fresh additions in subscribers would drive up the revenue of telecom sector by around 20 per cent, falling average revenue per user and cost of new launches will cut down profit growth around 3 per cent.
More From This Section
The accounting policy for forex losses and suspension of losses on MTM expected to help companies to reduce losses. The first quarter profits will see benefit of around Rs 3,000 crore in foreign exchange related income and expense due to six per cent rupee appreciation and change in accounting norm indicate CLSA research team.
Analysts at 11 research houses expect Hero Honda to post best-ever quarterly profit on the back of robust volume growth. Analysts expect profit and sales of Hero Honda to go up by over 65 per cent. Capital goods giant BHEL and engineering giant Larsen & Toubro expected to show 30 per cent plus growth in net profit on robust order book and decline in input cost.
The sales growth of cement sector will be driven by almost all companies firms while profit growth will come from ACC, Madras Cement, Shree Cement and UltraTech Cement. Among FMCG universe, Hindustan Unilever and ITC expected to post single digit growth in sales and profit while Britannia, Colgate, GSK Consumer, Marico and Nestle to post double digit growth in sales and profit.
Aluminium, copper and zinc producers such as Hindalco, Hindustan Zinc and National Aluminium are expected to post a 22 per cent decline in net sales, while their net profit is likely to plunge by 47 per cent. Integrated steel firms such as JSW Steel, Steel Authority of India (SAIL) and Tata Steel are expected to post a 17 decline in net sales, but the fall in their net profit is likely to be in the range of 30-80 per cent. Tata Steel would lead the decline with 35 per cent fall in revenue and a 70 per cent fall in net profit.
| QUARTERLY EXPECTATIONS | |||
| Y-o-Y growth rate in % | |||
| Net sales | Op profit | Net profit | |
| Oil marketing | -27.85 | 5194.57 | 2771* |
| Pharma | 11.72 | 2.06 | 24.70 |
| Cement | 14.11 | 21.09 | 18.37 |
| Power | 23.38 | 33.19 | 15.32 |
| FMCG | 11.14 | 16.88 | 13.56 |
| Capital goods | 18.15 | 13.07 | 12.75 |
| Software services | 6.57 | 5.48 | 3.76 |
| Telecom | 20.00 | 13.09 | 3.10 |
| Automobiles | 8.05 | 23.23 | 0.91 |
| Retail | 18.78 | 20.20 | 0.68 |
| Construction | 18.45 | 10.88 | -11.04 |
| Refineries | -25.51 | -19.41 | -23.19 |
| Steel | -17.24 | -36.12 | -46.83 |
| Metals(non-ferrous) | -22.35 | -46.93 | -47.30 |
| Realty | -50.90 | -64.25 | -67.32 |
| * Net profit of Rs 2,771 crore in June 2009 quarter against net loss of Rs 1,375 crore in June 2008 quarter | |||
Pharmaceutical companies are expected to report a 11 per cent increase in net sales and 25 per cent decline in net profit due to a general slowdown in the domestic market. Pharma analysts expect Glenmark Pharma, Sun Pharma and Wockhardt to post decline in net profit.
Construction and infrastructure firms are expected to report a sales growth of over 18 per cent on the back of strong revenue growth from GMR Infra, IVRCL Jaiprakash Associates, Madhucon Projects, Patel Engineering and Simplex Infra. However, GVK Power and Unity Infra are expected to post slower growth.
According to the research analysts, oil marketing companies are likely to have a bumper quarter with no inventory losses and over-recoveries in auto-fuels. Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) are expected to show net profits in the range of Rs 500-600 crore, while Indian Oil Corporation (IOC) is likely to post a net profit around 1,700 crore.