India Inc’s revenue likely to grow by 17.3% in Q4FY12

Macro headwinds are clearly far from over in the Indian economy, and this is what is expected to be reflected in the performance results, according to ICICI Securities report about the fourth quarter expected from next week. These views are shared by many brokerage houses that feel growth for the quarter will be muted.

“Our universe coverage, excluding banking and fnancial services and insurance ( BFSI), is expected to witness a sharp decline in revenue growth at 17.3 per cent YOY to 27.8 per cent in Q3 FY12 and 32 per cent in Q4 FY11. This is far lower than the last seven quarter average of 27.7 per cent. The BFSI space would post revenue growth of 22 per cent YOY,” the brokerage said in its report. Deceleration in sales growth coupled with limited ability to pass on the price rise would also reflect in margin contraction by one per cent and profits after tax could see a growth of 7.1 per cent YOY because of higher interest costs.

Whilst forecasting a growth of four per cent YOY for 144 companies excluding state- run oil companies, Morgan Stanley analysts expect revenue growth to moderate a bit, and six out of 10 sectors likely to see margin expansion. “Our analysts expect revenue growth to moderate to 19 per cent YOY as compared to 21 per cent YOY growth in the previous quarter. Materials and utilities will probably see the most margin compression,” the brokerage said. Analysts expect the strongest earnings growth for financials ( up 40 per cent YOY) and healthcare ( up 29 per cent YOY), whereas material companies are likely to see the sharpest fall in earnings, down 28 per cent YOY.

The key feature of MarchQ earnings season, according to Deutsche Bank analysts is likely to be the easing of revenue growth, which they expect to fall to lowest level since September 2009 at 19.4 per cent yoy vs. an average 25 per cent in the preceding 3 quarters of FY12.