‘Corporates may report dip in profits for second quarter’
THE expectation in terms of earnings for the second quarter of the fiscal year 2018 continues as before as that of the past 3 quarters. Banks and commodity companies are probably going to benefit from base impacts. Barring the technically driven growth, there is no much reason for the banking industry to cheer about as the recapitalisation still has to happen and NPAs are still a big problem.
Weak demand and rise in input costs may spoil the other sectoral growth trends. Manufacturers and IT companies are likely to face the brunt due to the disruption on account of the GST, lacklustre demand, and increase in input costs. Engineering companies are also going to show slowdown due to delay in execution of projects.
Consumer goods companies are expected to report single-digit growth in both top and bottom-line. Telecom companies and pharma companies are likely to be laggards and expected to report a steep decline in their net profit. However, the aggregate net profit of Nifty companies is expected to decrease by 1.5 per cent YoY during the quarter, against three per cent growth in the June 2017 quarter and 8.25 per cent growth in Q2 of the last fiscal year. This de-growth is after excluding the commodity companies and banks.
Overall, the consumer spending in both retail and industrial sector has been drastically affected leading to sluggish demand trend across the sectors. In the absence of private and public sector spending, the consumption growth is not encouraging. The increased compliances on account of GST are a big drag on corporate. The business environment is caught up with full of compliances, regulatory follow-ups etc. Retrenchment in several sectors is a reality and increase in unemployment goes without a doubt. The economic fringe suddenly caught up with the smooth economy otherwise. The whole industry is patiently waiting with a hope and judiciously adopting the structural changes.
The consumer spending in both retail and industrial sector has been drastically affected leading to sluggish demand trend across the sectors