New Delhi: India’s top 300 companies are expected to witness a bottomline growth between 20-22%, while sales growth will be in the range of 18-20% in Q4 of the financial year 2006-07, according to an Assocham analysis titled, ‘Eco Pulse’.
Fourth quarter result estimates in sectors like cement, steel, capital good, telecom and FMCG are expected to take lead in the current earning season and margins are tipped to exceed 25%.
A healthy topline and bottomline growth for at lest for 300 firms which will be seen as fiancial results begin to roll from the end of this week.
The report pointed out that despite concerns by the RBI and the government, the Indian economy was able to absorb inflationary pressures. Average inflation for the year 2006-07 has been 5.3%. Hearteningly, price rise has not impacted demand for consumers and manufactured goods.
Other findings indicate that cement companies are likely to witness a robust growth in the fourth quarter and for the fiscal 2007 on the back of strong volumes and high prices.
Steel is also expected to perform well benefiting from the rising prices. Though, increase in the prices of raw material like coal, iron ore and scrap could impact the production cost, prices remained strong. The AEP study expects this sector to post margins exceeding 30%.
Capital goods sector is expected to be one of the star performers and would churn out better numbers than the previous quarters, not only because of revenue accruals, but also due to the slash in customs and excise duties on basic inputs such as steel and copper.
The double digit manufacturing growth, aided by infrastructure development, spells boom time. The margins for this sector as will range between a healthy 25-28 %.
The increased per capita income and high consumer spending have been driving the growth of FMCG and telecom sectors. Both these sectors are in for good results, although the telecom firms are still spending on the huge capital cost. Since they remain in investment mode, their performance should not be judged from the bottomline. The topline growth would be a good index for the telecom firms.
The FMCG sector would be driven by volumes, coupled with the fact that the firms were able to pass on the rise in raw material cost to the end consumers.
The business environment is getting harder for banks and financial institutions with rising cost of deposits, liquidity crunch and enhanced provisioning requirements putting pressure on margins. Accordingly, the burden may get reflected in the results.
The study further establishes that the financial year 2007-08 is not likely to be as promising as 2006-07. The impact of escalating interest cost and input prices is likely to be increasingly felt in the next fiscal, putting pressure on the margins of the companies. Capacities too are expected to be strained.
“Going forward, the fate of India Inc. would largely depend on inflationary expectations and the RBI’s stance on interest rates”, according to Assocham president, Mr V Dhoot.