Mumbai, Jan. 8: Brokerages are expecting disappointing third-quarter results with many companies likely to bear the brunt of economic slowdown and other adverse factors such as high interest rates, rising input costs and a depreciating rupee.
Except a few sectors such as IT, cement, pharmaceuticals, FMCG and private banks, most are expected to see profits come under pressure.
Though IndusInd Bank will be the first to declare its third-quarter numbers, all eyes are on Infosys which will declare its result on January 12.
The IT sector, led by Infosys and TCS, is expected to do well largely because of the rupees depreciation; the same factor is also forecast to help pharmaceutical companies. However, brokerages warn that numbers from many other sectors, including metals, capital goods, telecom and real estate, may fail to bring cheer.
Brokerage Motilal Oswal expects companies covered by it to report an average net profit growth of 7 per cent in the third quarter.
This will be the lowest PAT growth in the last 23 quarters, excluding four quarters of global crisis when the year-on-year PAT growth was negative. The results would clearly reflect the macroeconomic backdrop of persistent high inflation, high interest rates and weak currency, it said in a recent report.
According to Motilal Oswal, though the aggregate revenue growth will be robust, margins will be lower by over 230 basis points. Moreover, high interest rates and forex related losses will hit the bottomline of companies.
Angel Broking feels though Sensex companies may see a topline growth, it is likely to be slower than the preceding quarter. Lower margins could result in earnings growth falling to a low of 7.7 per cent over the same period last year.
The cement sector, however, is expected to do well. Though the cement industry grappled with high input costs after the monsoon, analysts feel margins will improve because of better realisation and higher despatches.
Auto companies are likely to report mixed numbers as the impact of higher volumes and price hikes can be offset by the jump in input costs.
In banking, analysts say though PSU lenders may see a higher net interest income, private banks may do better because of relatively lower provisions.