Crisil sees Q2 revenue, earnings to be flat; fifth in row

Mumbai: Domestic ratings agency Crisil has said it expects the listed companies to continue to report flat revenue and earnings on tepid domestic demand, weakness in investments and dip in global commodity prices for the just ended September quarter.

"Fragile consumption demand, especially in rural areas, weakness in investment-linked sectors, and the meltdown in global commodity prices will more than offset the healthy topline growth expected in the export-oriented sectors,' Crisil said in a note Wednesday.

It expects the top 600 companies, excluding those in the financial and oil &gas sectors, to post a meagre 1.6 percent growth in revenues for the September period, making it the fifth successive quarter of single-digit topline growth.

The pre-tax profit for these companies is expected to grow by 2 a paltry percent, it added.

The estimate comes on the back of a dip in GDP growth to 7 percent in the first quarter, which the policymakers are looking to revive with various measures including a surprising 0.50 percent rate cut by RBI last week.

Crisil expects the revenue growth to improve in the second half on a mild uptick in consumption, increase in government spending and a low base effect.

On a sectoral basis, its senior director Prasad Koparkar said listed exporters including the infotech and pharma players are expected to show a topline growth of 13 percent, largely on a 7 percent depreciation in the rupee.

Companies in the fast moving consumer goods sector are likely to post a 6-7 percent revenue growth, which will be down from 12 percent in the last fiscal, while sectors targeting urban consumers like multiplex cinema chains, retail and telecom will post a double-digit revenue growth.

Cement and construction companies' revenue growth will be 2-3 percent in spite of the traction received from the uptick in public investments, while capital goods manufacturers will report a decline of 7 percent in revenues.

On the margins front, Crisil said it expects a 0.05-0.10 percent growth to 17.5 percent, led by the FMCG, automobiles, airline, tyre, and power generation sectors.

Despite the rupee fall, IT and pharma companies will post a 0.70 percent and 1.30 percent contraction in pre-tax margins, respectively, on pressure on the realisation front.

Telecom companies will report a handsome 2.5 percent expansion in margins on data revenue and control over marketing costs, it said.

Software major Infosys will kick of the second quarter earnings season from Friday.