The Telegraph
Thursday , October 11 , 2012
Since 1st March, 1999
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Twin troubles weigh on second-quarter show

Mumbai, Oct. 10: India Inc may come out with disappointing numbers for the second quarter because of the ongoing slowdown and high inflation.

Though IndusInd Bank announced its results today, the real action will only begin with Infosys on Friday.

A few sectors are expected to do well because of better pricing, good volume growth and the depreciation of the rupee against the dollar.

Cement, information technology, banking, pharma and FMCG may spring some surprises. However, automobiles, oil & gas, telecom, engineering, capital goods and real estate can weigh down on the overall earnings.

Brokerage Motilal Oswal says the second quarter of the current fiscal will see the lowest growth in profit after tax in the last seven years at 9 per cent, barring 2009-10 when net profit decelerated 11 per cent during the period.

“The second quarter of 2012-13 is likely to be yet another muted quarter in terms of the corporate sector’s performance,” the brokerage added.

Prabhudas Lilladher forecasts that revenue growth of Nifty companies may fall to a ten-quarter low of 13.4 per cent year-on-year. It had fallen lower than this in the third quarter of 2009-10 to 9.9 per cent.

The beginning, however, may not be disappointing as Infosys is expected to benefit from the rupee’s depreciation. For every one per cent depreciation in the rupee, the margins of the IT industry rise 30-40 basis points.

Stable pricing is expected to provide some comfort to the Bangalore-based IT services firm even as the global economy continues to pass through challenging times.

Infosys had stunned the stock markets in the first quarter when it cut down the forecast for revenue growth for the fiscal to 5 per cent against 8-10 per cent earlier. The company had not given any guidance for the second quarter.

Most analysts feel the company is unlikely to change its guidance.

“We expect Infosys to reiterate its 5 per cent growth guidance for 2012-13 with some positive bias for outperformance,” says Sandip Agarwal, analyst at Edelweiss Securities.

The banking sector, faced with rising bad assets, is also expected to see margins improve on account of lower funding costs. Private banks are expected to outshine their public peers with better net interest income and bottomline.

IndusInd profit

IndusInd Bank today met Street estimates by posting a 30 per cent jump in net profit for the second quarter ended September 30 on higher fee and core income. The private lender recorded a net profit of Rs 250.25 crore compared with Rs 193.09 crore in the corresponding period last year.

Backed by a strong growth in advances, the net interest income (NII) of the bank grew to Rs 509.73 crore from Rs 419.19 crore in the corresponding quarter of the previous year, a jump of 22 per cent.

NII is interest earned minus interest paid.

While advances grew nearly 31 per cent to Rs 39,427 crore, deposits rose nearly 24.50 per cent to Rs 47,765 crore.

Within deposits, low-cost current account and saving account deposits showed an increase of 26 per cent to Rs 13,365 crore. The share of these accounts to total deposits improved to 27.98 per cent from 27.70 per cent.