India Inc earnings slowing down?

Motilal Oswal is expecting the growth momentum in corporate performance to remain strong. Their forecast is for sales growth of 25 per cent YoY and net profit growth of 42 per cent. Merrill Lynch analysts expect Q4 sales growth of over 20 per cent and profit to grow by over 15 per cent. Prabhudas Lilladhar expects double-digit growth in sales and profits.

Analysts' expectations are that the Q4 results will primarily be driven by oil and gas companies, and supported by auto, FMCG, cement and pharma. The key highlight of the quarter is the expected bounce of the oil and gas sector - especially the marketing companies. The oil and gas companies are expected to report sales growth of 25 per cent.

Retail will be the fastest growing sector with 52 per cent sales growth. Infrastructure and telecom are also expected to maintain their growth momentum. IT will continue its momentum, and YoY sales growth will be a high 36 per cent.

Textile sales growth would be lower, pharma sales growth would be over 25 per cent, auto sales growth will be 15-25 per cent, and revenues for banks will go up by 10-15 per cent. FMCG growth will improve to over 15 per cent with volumes picking up and price hikes of some products. Cement sales will also pick up post-monsoon with a growth of 20 per cent. Engineering will continue its strong momentum with 33 per cent YoY jump in revenue.

Oil and gas companies are expected to show profit growth of over 100 per cent, pharma over 50 per cent and infrastructure over 40 per cent. While banks are expected to show 20 per cent increase in profits, the profit growth of cement companies will be a little over 10 per cent.

Engineering sector is expected to report 35 per cent jump in profit, IT by over 35 per cent, auto 21 per cent and FMCG over 40 per cent. Non-ferrous metal companies, too, will report higher profits, but steel companies will show a decline in bottomline.

Take away: Is there a SLOWDOWN in India Inc earnings? Watch the numbers carefully!

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