Sectors which would do good will include automobiles, FMCG, pharmaceuticals, cement and organised retail, said Crisil prediction.
Jump in margins due to lower commodity prices will take India Inc's pretax profit growth to a six-quarter high of 7% for the January-March period, but the revenue growth will remain lacklustre, domestic credit rating agency Crisil said on Monday.
EBITDA (earnings before interest, taxes, depreciation, and amortisation) growth will go to 7% on "higher gross margins derived from lower commodity prices", it said in a research note.
Days ahead of listed companies starting to report the quarterly numbers, Crisil said revenue growth will remain lacklustre at 2% on low commodity prices, weak investment demand, patchy demand recovery and low pricing power due to competition.
The estimates are based on analysis of 600 companies excluding those from the oil and gas and financial sectors, which account for 70% of market capitalisation of the NSE, it said. On its expectations from the fiscal 2017, it said the revenue growth is unlikely to touch double digits even if monsoons are adequate.
If the monsoons are adequate, the revenue growth for FY17 will touch 8%, which would be double the 3-4% set to be achieved in FY16, it said, adding that the net profit will grow 12-15% on margins improvement and lower interest costs.
Sectors which would do good will include automobiles, FMCG, pharmaceuticals, cement and organised retail. The large steel players, which are undergoing stress at present, are also likely to do better as global prices pick up and imports reduce, it said.
For the March quarter, the overall "modest improvement" will be driven by information technology sector which is likely to post a 14% rupee revenue growth driven by volume growth and a 8% depreciation in the rupee, senior director Prasad Koparkar said.
The IT sector will also substantially high EBITDA margins as the same were depressed last year due to sector leader TCS' decision to give employee bonus, he said. Higher domestic sales and benefits on the input costs will help auto sector to do well, while uptick in advertising and pick-up in subscription revenue is expected to help the media sector, he said.
The state-run banks will continue to report a decline in the core net interest income and higher provisioning because of worsening asset quality, it said. The gross non-performing assets ratio for the state-run banks will go up to 7.7% in March 2017, up from an estimated 6.8% in March 2016, it added.
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