Corporate India's earnings for the last quarter of 2008-09 will under be pressure with most companies reporting weak numbers in the wake of global liquidity squeeze, falling demand and lower realisations, analysts said.
"India Inc will deliver one of its weakest earnings quarters when it reports its Q4FY09 numbers. Repercussions of the pressure on global liquidity, tight monetary policies in the first half of 2008 and the consequent collapse in aggregate global demand for goods and services, will clearly be reflected in the earnings of companies," domestic brokerage firm Angel Broking said in a report.
Elaborating on the factors which would keep the corporate earnings under pressure, Edelweiss Research in its fourth quarter earnings preview report said, "Slowing economy, weak demand and lower realisation will keep earnings growth and profitability of Indian corporates under pressure in the near term."
The 30-Sensex companies would kick-start their fourth quarter earnings season with Infosys Technologies announcing their figures on Wednesday.
In an earnings preview for the 30-Sensex companies, Kotak Institutional Equities expects them to decline significantly in the quarter ended March as compared to the same period last year.
"We expect earnings of the BSE-30 index to decline by 15.1 per cent year-on-year and earnings of the BSE-30 index (excluding Energy) to decline by 14.3 per cent Y-O-Y," Kotak said in its preview report for the last quarter.
Another brokerage firm Prabhudas Lilladher, in its January-March'09 earnings preview, said, "Most sectors are expected to report muted revenue growth, weak margins and poor earnings ... However, it is apparent that better-than-average performance is very marginal and underscores the fact that slowdown in earnings is fairly widespread."
Sectors such as banks, automobiles, metals, media and financial services are likely to act as a drag on the Sensex's earnings. While technology, cement oil & gas and capital goods companies are expected to report "relatively better numbers", it said.
Further, brokerage and equity research firm Religare Hichens Harrison (RHH) stated that mark-to-market losses, indicating fall in the value of an investment from the book value level to current market price, would be a key concern for companies.
"Though the implementation of AS-11 has been deferred to 2011, we believe Indian corporates face a high risk of MTM losses," RHH said in a report.
The Bombay Stock Exchange benchmark Sensex has lost 38 per cent on an Y-o-Y basis till March 2009.
