India Inc set to slump further in FY09

RESULTS PREVIEW

f/032108_01.pdf">Click here for ALL ABOUT THE SENSEX BIGGIES  In the nine months ending December 2007, the Sensex firms showed a slowdown with a sales growth rate of 19 per cent and a net profit growth of 33 per cent. The outperformers were banking and pharmaceutical firms and the underperformers were capital goods, metals and power.  The earning estimates for 2007-08 indicate that 26 Sensex firms (estimates for three firms are not available and Tata Steel has been excluded as its estimated earnings are inclusive of it overseas subsidiary Corus) are likely to post a sales growth of 18.8 per cent and net profit growth of around 31.2 per cent.  The projection for 2008-09 shows that the sales growth will slow down to 17.1 per cent and the net profit growth will dip by 700 basis points to 24.2 per cent.  The sectoral performance within the Sensex firms indicates that automobile, banks, capital goods, fast moving consumer goods (FMCG) and power companies are likely to put up a good show.  The list of laggards includes software services, cement, metals and telecom sectors. Companies in these sectors will see a decline in the sales growth rate. Their profit growth rate will be lower on account of a dip in operating margins.  The sales growth for the three auto firms is estimated to grow at 18.2 per cent in 2008-09 from 14.3 per cent in 2007-08.  The growth driver for the auto sector would be Tata Motors, which is estimated to show 18.3 per cent rise in sales in 2008-09 compared to 10 per cent in 2007-08. Tata Motors