Last week, Infosys, the second-largest IT services exporter, posted better-than-expected results for June 2008 and raised guidance for the quarter-ending September 2008
MUMBAI: Last week, Infosys, the second-largest IT services exporter, posted better-than-expected results for June 2008 and raised guidance for the quarter-ending September 2008 and year-ended March 2008 in rupee terms.
Infosys’ consolidated revenues grew 6.9% over the March 2008 quarter at Rs 4,854 crore, which looks quite good in difficult times.
As financials for the quarter start pouring in, most brokerages expect some impact of the overall slowdown on the numbers. Higher interest rates and soaring crude prices are expected to impact the financials of Indian corporates adversely.
CLSA Asia-Pacific Markets highlighted the key trends expected in every industry sector for June 2008 quarter in a report released on July 7, 2008 (see table). Let us see what sectors have in store for the quarter.
The auto industry is likely to report poor numbers on account of lower volumes growth.
It is currently bearing the brunt of higher interest rates and lack of credit, which has resulted in a decline in demand for vehicles. Higher input costs are expected to put pressure on the operating margins of auto companies.
Profitability of the banking industry is likely to be hit on account of mark-to-market and/or treasury losses.
Prices of bonds, which banks bought at a higher price earlier, have fallen and so, banks have to make provisions for them. For instance, price of benchmark 10-year G-sec has fallen to Rs 92.3 as on Friday from Rs 102.43 on May 2, 2008. A lot of banks held bonds under available for sale (AFS) category where securities need to be marked to their current market value.
Cement firms may see earnings before interest, tax, depreciation and amortisation (Ebitda) margins come under pressure on account of rising input costs and marginal increase in prices.
On the other hand, the metal industry is expected to benefit from the sharp rise in metal prices, as it increases revenues. However, companies that do not have their own raw material resources are likely to witness pressure on their margins on account of higher input prices.
Oil companies are likely to reel under record high crude prices and incur huge under-recoveries during the quarter.
The IT industry and export-driven companies are expected to benefit from rupee depreciation during the quarter.
Revenue growth of power companies like National Thermal Power Corporation is expected to be slower on account of lower plant load factor.
p_pallavi@dnaindia.net
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