dia Inc is expected to perform well in terms of topline (total revenue) growth for the quarter ended September 2010, but not on the bottomline (net profit) front, given higher cost of inputs.
There is a consensus among the brokerages that the revenues growth of the 30 Bombay Stock Exchange (BSE) Sensex companies put together would be around 20 per cent, but the same kind of consensus is missing on profitability front. The quarterly results announcement of major companies is expected to kick off next week.
Brokers' Take On Q2 Numbers
However, Navin Agarwal of Motilal Oswal Securities Ltd (MOSL) sees a robust growth in profitability for Sensex firms at 25 per cent YoY, and eight per cent quarter on quarter ( QoQ or against same quarter the previous year). These firms, however, are expected to post about 19 per cent of rise in revenues YoY or nearly five per cent rise QoQ. "The oil and gas sector leads growth during the quarter, driven by Reliance Industries Ltd (RIL) and Cairn India.
Banking continues to deliver a steady 22- per- cent earnings growth," said Agarwal.
Oil and gas sector is expected to see a net profit growth of 36 per cent QoQ, while its YoY growth is expected to be about 25 per cent, owing to better realisations for oil- marketing companies (OMCs). Metals and auto sectors are also expected to be on the high profit path with 105 per cent and 87 per cent YoY growth.
But, according to Ashutosh Datar, economist at IIFL, profit growth for its universe will be sluggish at five per cent, mainly due to losses arising from OMCs.
"Headline profit growth for our universe would be sluggish at five per cent but growth would have been stronger were it not for the likely 36 per cent YoY decline in profits of the oil and gas sector (due to large losses at OMCs). Excluding the commodity sectors (oil and gas, metals), profit growth would be somewhat better, at 11 per cent YoY," Datar said.
Angel Broking has identified metal, financial, oil and gas and capital goods sectors as the robust performers in the just concluded quarter, while FMCG (fast moving consumer goods) and IT sectors are expected to perform in line with Sensex.
"The key underperformers during the quarter would include auto, telecom, cement and power sectors," said Thakkar of Angel.
"Banking (or finance), engineering, FMCG (fast moving consumer goods) and IT sectors and media have seen consistent growth rates over the last six quarters. Telecom will post its fifth consecutive quarter of earnings decline," according to MOSL. The second half of 2010- 11 would see change in earnings growth pattern across sectors with sectors like engineering, real estate, infrastructure and utilities reporting a significantly better earnings growth than they did in the first half of the fiscal, Agarwal said.
"The telecom sector will continue to post negative earnings growth in the second half of the current fiscal," Agarwal added.