MUMBAI: Even as the Sensex and Nifty climb to new highs, brokerages are forecasting a decline in the average earnings of some of the leading companies that include both the key indices for the quarter ended June 30, 2015.
According to a survey of 159 companies by Kotak Equities, net income of these companies could decline by an average 2.1 per cent in the three months ended June 30, compared with net income in the three months ended March 31, 2015. The decline could be less dramatic 1.1 per cent compared with the quarter ended June 30, 2014.
For an economy that’s officially growing at 7.5 per cent and its benchmarks surging to comfortable levels, decline in earnings could bring some reality check. Cement, automobile, metals and mining sectors could lead the decline in net income, according to Kotak Institutional Equities.
Excluding energy companies, the net profit could drop 3.8 per cent over the year earlier period, according to Sanjeev Prasad, Sunita Baldawa and Akhilesh Tilotia in a report.
Net profit by companies in the metals and mining segment in June 2015 quarter could drop 36.3 per cent on a year-on-year basis. Cement with 20.8 per cent decline and automobiles with 17.4 per cent drop are among the others to lead a decline.
Companies in real estate (38 per cent), media (28 per cent), internet (26.5 per cent),
telecom (24.2 per cent), consumer products (16.5 per cent), pharmaceuticals (4.8 per cent), and infrastructure (13 per cent) and energy (10 per cent) sectors are expected to post a rise in profits as well as sales.
In its outlook on earnings in consumer goods, Edelweiss Securities noted that even though the slowdown in urban areas seems to be ebbing, any significant recovery will only be gradual.
Rural growth has decelerated to some extent, according to Abneesh Roy, Pooja Lath and Tanmay Sharma at Edelweiss said in a report. Good monsoon and increase in minimum support prices of 3-4 per cent will contribute a bit to the rural growth.