MUMBAI: Earnings of key companies in different sectors are likely to decline despite a sharp drop in price of oil, agricultural products, and other commodities, deceleration in inflation, improvement in current account deficit and reasonably steady rupee against the dollar, according to research firms tracking the economy and performance of different sectors.
Revenue growth of companies in the March quarter could decline to a seven-quarter low of 2.5% compared with the same quarter a year earlier, says Crisil, which tracked 600 companies representing 70% of the market capitalisation of the National Stock Exchange.
Revenue growth may be steady at 13.1%, while profitability of companies may fall to 11.1% due to higher interest rate costs, according to Edelweiss Securities.
Sectors that may buck the trend to post higher revenue include export-oriented sectors such as IT and pharmaceuticals, while sectors linked to the domestic economy including cement, capital goods and construction, and consumption such as automobiles and staples are likely to post sluggish numbers.
Emkay India Equity Research says a fall in commodity prices, disinflationary pressure, reflected in gross tax collection, contraction in imports and exports, and fall in incremental bank loans and declining government spending are among factors affecting performance of companies.
“Steel, petrochemicals, and manmade fibres manufacturers will be impacted by the rapid slide in global commodity prices,’’ said Prasad Koparkar, a senior director at Crisil Research. “Sluggish growth in volumes would constrain revenue growth of cement companies. Capital goods manufacturers may see a further 13% y-o-y fall in revenues.