Earnings of India's top 50 companies estimated to rise by about 10 per cent

CHENNAI: For the top 50 companies in the country, earnings are estimated to rise by about 10 per cent year-on-year (y-o-y) during the January- March 2018 quarter, down from the 12 per cent y-o-y growth clocked in the third quarter and 41 per cent growth during the year-ago quarter. IT major Infosys will be the first company to report its numbers on April 13.

The revenue growth for the fourth quarter of the just concluded fiscal will be “slightly slow” as compared to last year, where the waning impact of the demonetisation had helped the consumption sector deliver a faster growth, noted Prasad Koparkar, senior director of Crisil Ratings and Research. This year, the growth will be lopsided as it is likely to be driven only by a few sectors.

Domestic consumption-oriented sectors, excluding telecom, such as auto and consumers, are likely to extend double-digit top-line growth, while export-oriented sectors like IT and pharma are likely to post another disappointing quarter with low single-digit growth.

In banking, while credit growth is higher, it will be offset by lower investment gains. Further, higher cost of funds is likely to weigh on NIMs of NBFCs. A deeper look at the estimates shows that Nifty companies are likely to post profit growth of 15 per cent with Indian Oil Corporation (25%), GAIL (10.8%), State Bank of India (28%) and Oil and Natural Gas Corporation (14.3%) being the front-runners.

At the other extreme, Bharti Airtel, Sun Pharma, Lupin, Axis Bank and ICICI Bank are estimated are expected to be the biggest laggards posting a 30 per cent plus contraction. “While overall earnings are improving, the quality leaves much to be desired as commodities account for little over 80 per cent of the profit growth,” pointed out Prateek Parekh of Edelweiss Securities.