India Inc’s earning estimates look bleak
The earnings estimates for top 100 companies suggest a year-on-year decline in revenues in the quarter ended March 31, 2009, though marginal, for the first time ever since the quarterly data was made available in 1999, reports HT Correspondent.business Updated: Apr 03, 2009 23:44 IST
The earnings estimates for top 100 companies suggest a year-on-year decline in revenues in the quarter ended March 31, 2009, though marginal, for the first time ever since the quarterly data was made available in 1999.
Morgan Stanley said that its analysts estimate that revenues of the 100 companies it covers would fall by 1 per cent. The aggregation of estimates predict earnings to fall by 3 per cent in the quarter end March 2009, compared with 10 per cent fall in the December 2008 quarter.
Excluding energy and financials, the decline is 16 per cent, Morgan Stanley India said in its earnings estimates. Companies will start reporting their fourth quarter and 2008-09 year earnings from this month.
Morgan Stanley also predicted a 7 per cent drop in BSE Sensex earning, compared with 16 per cent fall and 5 per cent growth in December 2008 and September 2008 quarters respectively.
EBITDA (earning before interest, taxation, depreciation, and amortisation) margins are likely to look up for energy, healthcare and consumer staples. The EBITDA margins are likely to rise 0.36 percentage point year-on-year due to energy sector.
Other than energy, the margins are likely to fall by 3.83 percentage oints. Margins for materials, telecom, utilities, and consumer discretionary sectors are likely to witness a sharp fall.
Tata Motors’ net profit is forecast to fall by 90 per cent and that of other automobile player Ashok Leyland by 83 per cent. Though most banks are expected to report a modest growth in net profit, ICICI Bank’s net profit is seen falling by 40 per cent.
Analysts were of the view that two out of these 100 companies are likely to see losses while 19 would see 50 per cent or higher fall in earnings. Only four companies are expected to mark 50 per cent or more growth in earnings.
There seems to be a lot of dispersion in earnings growth forecasts across sectors and stocks.
Combined with the election uncertainty, this appears to be a recipe volatility on the bourses, Morgan Stanley said.