Indian firms’ Q1 earnings growth likely at 7-qtr high
NEW DELHI : Indian companies are expected to deliver their strongest earnings growth in seven quarters, as declining input costs bolster profitability. While banks and automobile sectors are seen to be leading drivers of overall profits in the June quarter, several more sectors are expected to contribute to the earnings momentum. “Softer commodity and fuel prices could lead to an expansion of margins for fast-moving consumer goods (FMCG), auto, and allied sectors," said Deepak Jasani, head of retail research at HDFC Securities Ltd.
According to data compiled by Mint, the net profit for 44 companies in the Nifty 50 index is expected to grow 25.3% from a year earlier during the June quarter, while net sales are expected to grow at a slower 6.20% pace. “The best performance is expected from auto and finance, closely trailed by energy and FMCG," said Vinod Nair, head of research at Geojit Financial Services Ltd. Operating margins widened, supported by consumer demand and easing inflation, boosting earnings.
Oil marketing companies are expected to drive earnings in the energy sector, while industrials, consumer durables, and hotels are likely to report improved earnings performance. Easing supply-chain constraints and a pre-election pickup in project execution are likely to support the earnings of industrial companies. The pharmaceutical sector may also see an earnings rebound with new US launches gaining regulatory approval.
On the other hand, analysts noted a sense of pessimism in the cement, metals, and chemicals sectors due to moderation in demand and high raw material costs. But easing energy costs may provide some relief to cement and metals companies. However, analysts anticipate weak earnings from non-banking
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