India Inc is expected to post 35-45 per cent rise in net profit in the fourth quarter ended March 31.
While auto, fertiliser, metals, oil & gas, steel pipes, pharma, power equipment, real estate and sugar sectors are expected to record robust growth, cement and telecom sectors are likely to see a decline in net profit. Banks, capital goods, power and software services sectors would record 10-20 per cent profit growth.
The cost pressure, however, is expected to hit operating margins, which are expected to grow 30-60 basis points year-on-year.
The fourth quarter preview by Centrum Broking and MF Global Research indicated while revenue growth would be between 20 per cent and 35 per cent, there would be 30 per cent growth in net sales of automobiles, auto ancillaries, engineering, fertilisers, non-ferrous metals and oil & gas sectors.
Telecom is expected to see a decline in net sales following good growth in earlier quarters. Power, software services, fast moving consumer goods, pharma and banking sectors are likely to post a single-digit growth in net sales.
The automobiles industry is expected to record 35-50 per cent growth in net sales and a net profit growth rate of over 100 per cent. Net sales growth of Ashok Leyland and Tata Motors is expected to touch 170 per cent and 66 per cent, respectively.
Ashok Leyland, Bajaj Auto, Mahindra & Mahindra, Maruti Suzuki and Tata Motors are also expected to post over 100 per cent growth in profit for the fourth quarter. Operating margins for motorcycle manufacturers are expected to increase by 250 basis points, while car and utility makers are expected to grow 500 basis points.
Fourth-quarter results for cement companies are not likely to be encouraging with single-digit growth in sales and an 8 per cent dip in net profit.
Despite some recovery in cement prices, increased cost pressure due to higher energy prices might result in operating margins coming down by over 175 basis points. However, Grasim Industries is expected to post net profit growth.
Although software services companies are likely to report double-digit growth in revenue, wage hike and currency fluctuations may dent margins with the pound and euro seeing a decline of over 8 per cent against the dollar. The appreciation of the rupee by 4 per cent during the quarter is likely to impact profit growth.
Growth in net profit is expected to be 20-25 per cent. HCL Technologies and TCS are expected to record a healthy profit growth. However, Infosys Technologies is expected to disappoint the market with single-digit year-on-year growth in revenue and profit.
Steel manufacturers are expected to register a significant rise in sales volumes due to relatively high demand. While lower realisations on a year-on-year basis may restrict top-line growth, sequential revenue growth is expected to improve. Margins are likely to improve substantially due to a dip in coking coal and iron ore prices.
Non-ferrous metal makers such as Hindustan Zinc, Hindalco and Nalco are expected to show 50 per cent-plus growth in net sales and net profit. With a sharp increase in prices of aluminium and copper over the last one year on the London Metal Exchange, operating margins are expected to improve by over 1,200 basis point year-on-year.
The increase in benchmark Singapore GRMs (gross refining margins) to $4/bbl from $1.3/bbl in the third quarter is expected to benefit standalone refineries and Reliance Industries.
The rise in average crude prices by 2.6 per cent during the quarter to $78/bbl from $76bbl could have a negative impact on oil marketing companies (OMCs) — ONGC and Oil India — as it would result in higher under-recoveries.
Centrum analysts expect Reliance Industries to clock a 64 per cent rise in net profit on higher GRM of $8.7/bbl compared to $5.9/bbl reported in the third quarter. ONGC and Cairn India expects to report outstanding growth in net profit on account of over 1,000 basis points increase in operating margins.
