INSUBCONTINENT EXCLUSIVE:
companies, may fall 8% while net profit is expected to slide 21.4%
An analysis by the ET Intelligence Group shows the worst-hit will be automobiles, cement, metals and mining
Banks and finance companies, FMCG firms, IT and pharma sectors may be impacted moderately, the analysis shows.
Net profit for this sample of
companies had risen 54.8% in December 2019 quarter, driven by growth in select banks, finance, and oil - gas firms
institutional research head, Motilal Oswal Securities.
Consumer-facing sectors are unlikely to be impacted much due to demand for
essentials, but discretionary spend will be hit
Tirumalai.
Lower commodity prices may boost some manufacturing companies, but that is likely to be offset by tepid demand and sales
expect margin benefit from lower input costs, but they may still contract due to lack of operating leverage as revenues would be severely
In addition, companies are expected to face earnings downgrades by brokerages amid the economic slowdown
is likely to be among the worst-hit sectors as it will bear the combined impact of lower production due to new emission norms and the
Revenue may decline by over 26% year-on-year, while profit could be half of the previous quarter
Operating margins may shrink by 200-300 basis points.
Capital GoodsCapital goods firms may suffer as new orders, most of which are typically
won during the fag end of the year, dry up
Diversified conglomerates such as L-T may suffer limited impact due to better execution of projects
While these companies will lose little by way of revenue, working capital requirements will stay stretched in the near term.
CementCement
volumes are expected to fall by nearly 9% year-on-year while revenues of large cement companies such as ACC, Ambuja Cements, Shree Cement
and UltraTech could fall 15-17%
Lower crude prices could cushion the earnings shock.
FMCGITC is likely to be the worst-hit due to a complete halt in cigarette sales, and
its volumes could drop by 4-5%
Among FMCG players, bulk-buying of essential and personal hygiene products in the last 10 days of March may support volumes growth.
