MUMBAI: Companies from the automobile, cement and logistics may lead the growth in third quarter earnings, while companies from infrastructure, capital goods, power and construction may lag behind because of a slow pick up in investments and modest economic growth.
Among the first result by a large company will be from Infosys Technologies on Friday. Most IT companies that earn a large chunk of earnings from overseas have been hurt by slowing growth in Europe and strong dollar. So, the revenue guidance by Infosys could lead investors to better understand the likely trend to expect.
Top four IT companies could report between zero to 1.7 per cent revenue growth over the earlier quarter after neutralizing for domestic growth, rupee depreciation and overseas slowdown, according to Kotak Securities.
The global decline in crude oil prices will likely hurt revenues of companies in oil and gas sectors including Cairn India. Indian Oil Corporation, HPCL and BPCL will make some gains from dip in under-recoveries on diesel even as they may lose on inventories.
Automobiles, especially two-wheelers, are expected to post growth. Maruti Suzuki, Hero Motocorp and TVS Motors may report net profit growth over year-ago period of 29 per cent, 30 per cent and 38 per cent respectively, according to Kotak Research.
“A strong foundation for revival in auto demand is being laid out with lower inflation, and fuel price, ample availability of finance and improving consumer sentiment,’’ said Kaushal Maroo, analyst with Emkay Global Financial. He expects 62 per cent revenue growth from bus-maker Ashok Leyland.
However, with bank credit growing around 10 per cent and slow pick up in investment will hurt infrastructure, power and capital goods companies. Cement sales in April-November 2014 were 8.5 per cent higher over the same period a year earlier.
An expected pick up in infrastructure and overall projects could increase its demand and sales. The fate of logistics companies is tied with ports, which witnessed increase in container handling in the third quarter.
If markets have to move up they will need to have more confidence in the medium-to-long term growth rates of corporate India, said Dipen Shah, head of private client group research at Kotak Securities.