India Inc. will likely report muted earning growth for January–March due to a decline in bank earnings growth, Jefferies said. It pegs earnings growth at 2% on an annualised basis.
Lending businesses' profitability will likely decline 8% year-on-year during the fourth quarter. Overall, the earnings trend of India Inc will likely remain muted, with earnings to see flat-to-low year-on-year growth in consumer, lending financials, cement, and chemicals sectors. IT earnings growth will decrease 3% sequentially and 6% on the year, Jefferies said.
Excluding financials, domestic companies will likely report Ebitda growth of 5% on the quarter and 12% on the year for the January–March period. Ebitda margin will rise 5% on the quarter, and will likely remain flat on the year. However, the operating profit will be at a five-quarter high. Margins in consumer staples and cement will rise 1% on the year for industrials, but will be flat in most others, the brokerage said.
On-year revenue growth of India Inc will be 12% and likely remain muted on quarter, according to the brokerage. Aggregate revenue for IT companies will continue to be subdued at 1.3% on the quarter and 7.2% on the year for the January–March period.
Oil marketing companies will see 50% year-on-year profit decline because of weak marketing and refining margins. Compressed natural gas will likely see year-on-year earnings decline of 15% or more on lower Administered Price Mechanism allocation, though situation improved sequentially, according to Jefferies.
Jefferies' View On Sectors
Jefferies is expecting strong performance from selected two-wheeler manufacturers and original equipment manufacturers. Companies in this space will post over 20% net profit growth and revenue growth of 14–22%. Mahindra & Mahindra Ltd. will likely post 19% earnings growth.
Capital market players like BSE Ltd. and wealth managers 360 One Wam Ltd. will also deliver strong earnings for January–March.
Indian hotels will likely post 29% Ebitda growth on an annualised basis because of steady travel demand. InterGlobe Aviation Ltd. will see 33% Ebitda growth.
Syrma SGS Technology Ltd. and Kaynes Technology India Ltd.'s earnings are expected to grow 20–45% on strong top-line performance.
Cement companies will likely see revenue growth of 10% on the year because of a volume growth uptick to near double digits. These companies' margins will also improve 3% on the quarter.
Housing finance companies like Aptus Value Housing Finance India Ltd. and Home First Finance Co., along with gold financiers Muthoot Finance Ltd., will likely post over 20% profit for January–March.
In the pharmaceutical space, Torrent Pharma Ltd., Divi's Laboratories Ltd., Lupin Ltd., and Laurus Labs Ltd. will likely post 20–45% earning growth in the fourth quarter. Apollo Hospitals Enterprise Ltd., Max Healthcare Institute Ltd. are expected to post 20% Ebitda.
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