Indian companies are likely to post seven percent growth in operating margins, or earnings before interest, taxes, depreciation, and amortisation (EBIDTA), for the quarter ended March 31, 2016. It will mark the fastest growth in six quarters, according to Crisil Research, a financial research firm.
Lower commodity prices, apart from weak investment, sluggish demand recovery and low pricing power would result in revenues growing at a modest two percent during the quarter, Crisil Research said in a update, based on a study of 600 companies (excluding financials and oil & gas) that account for about 70 percent of the market capitalisation of the National Stock Exchange.
IT sector to lead topline growth
Revenues of IT services companies are expected to grow in double digits.
"The modest improvement in performance in the March 2016 quarter would be driven by a handful of sectors. Information technology service providers are likely to post ~14% rupee revenue growth, driven by volume growth and 8% depreciation in the rupee against the dollar," said Prasad Koparkar, senior director, CRISIL Research.
"Ebitda margin would jump up substantially as a one-time expense (the bonus TCS) had pulled it down last fiscal," he added.
Other sectors that are expected to post higher topline growth include automobile, media, pharmaceuticals, power generation and organised retail.
Sectors such as automobiles, FMCG, pharmaceuticals, cement and organised retail are likely to outperform in financial year 2016-2017, while large steel companies are also likely to do better because of a pick-up in global steel prices and lower imports, according to Crisil Research.
Estimates at variance with that of Prabhudas Lilladher
Financial services firm Prabhudas Lilladher (PL) also came out with its estimates of Q4 revenues and profit Monday. The firm projected its universe of companies to post lower revenues and EBITDA on a year-on-year (YoY) basis, but grow sequentially (QoQ).
Low commodity prices have been a mixed blessing for India Inc., according to PL. "The pressure on the commodity sector continue to get impacted in the overall sales data, though the lower commodity prices have benefited the user industry resulting in expansion of EBITDA margins," it said.
TCS, Infosys and Wipro will be declaring their fourth quarter results April 18, April 15 and April 20, respectively.