India Inc is bracing for weak quarterly results even as the economy limps back to normalcy after the demonetisation shock that withdrew all but a fraction of the currency from circulation.
Estimates by brokerages indicate that consumer-oriented companies in telecom, real estate, auto and fast-moving consumer goods are likely to bear the maximum brunt of the note ban.
A Monday report by The Financial Express says India Inc's profitability will worsen or stay little changed in the October-December quarter, whose results will be announced in coming days.
Citing a research report by Kotak Institutional Equities, it says that the net profit of the BSE's 30 Sensex companies is likely to be flat on a year-on-year basis and decline 2.3% on a quarter-on-quarter basis, as the effects of demonetisation become apparent.
This, even as Kotak expects a 23% increase in earnings growth for the 200 companies it covers, because of low profits or even losses posted by some of the biggest ones including government-owned oil companies, banks such as State Bank of India and Bank of Baroda, and Bharat Heavy Electricals Ltd in the October-December 2015 quarter.
The Mint newspaper, too, said on Monday that for the full fiscal year 2016-17, banks' earnings per share are set to decline by as much as 12.9%, as the full impact of the ban on high-value currency becomes clear.
Citing ICICIDirect.com, the Mint report says that average revenue of Sensex firms is expected to grow 2.1% while their net profit could go up by 12% on a year-on-year basis.
Edelweiss Financial Services said it expects companies that are part of the National Stock Exchange's 50-stock Nifty index to register an 8% revenue growth and an 18% net profit growth on a year-on-year basis, according to the Mint report.
The automobiles sector, which has seen lower sales during November and December, as a direct result of demonetisation, will see their earnings margins impacted by 0.9%, with big companies like Tata Motors Ltd expected to have had a weak quarter.
While pre-tax earnings for the consumer durables sector are likely to go down by 5-6% according to Kotak, telecom companies including Bharti Airtel and Idea Cellular are likely to see their revenue from voice decline by as much as 8-10%, owing to the impact of the launch of Reliance Jio in September last year.
In the real estate sector, most listed companies are likely to see their debt go up, the Financial Express report said, without quoting any specific figures.
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