Industry earnings seen ‘on a slide’ in another quarter

Sanjeev Sharma

Tribune News Service

New Delhi, October 12

India Inc’s financial results in the September quarter will see another quarter of earnings decline on the back of slow recovery in the economy and the hit taken by commodity companies due to the fall in global prices.

The consensus among brokerages is that the second quarter of financial year 2016 will be another quarter where profits will decline and revenue will also fall.

Motilal Oswal Securities said in a report that in its coverage of companies that there will be a 5% year-on-year decline in aggregate profit after tax (PAT) and 3% de-growth in sales.

It said only five sectors are expected to register more than 15% PAT growth — media, real estate, private banks, NBFCs and utilities. Six sectors are likely to report PAT de-growth — healthcare, telecom, retail, energy, cement and metals.

Corporate performance during Q2FY16 will continue to tread low for the fourth consecutive quarter, according to Dhananjay Sinha, Head — Institutional Research, Emkay Global Financial Services Limited.

He said the demand conditions, both domestically and globally, remained weak as indicated by sharp decline in exports growth, disinflationary trend in manufacturing inflation, subdued credit growth and slowing down of direct tax collection proceeds.

According to a note by Prabhudas Lilladher India, while the domestic economic fundamentals have not seen any deterioration, the pace of recovery have disappointed and is below the high expectations that was created a year ago with the global factors also partly to blame for the scenario. “This has resulted in earnings disappointments leading to a fatigue”, it added.

Crisil Research has estimated that the September quarter topline and earnings growth will remain flat as soft commodity prices and weak investment demand play spoilsport.